- Binance’s role in FTX’s bankruptcy filing has drawn new probes from the US feds.
- The exchange’s operations remain functional, showing no signs or reasons for the community to panic.
Binance Exchange, the world’s largest platform for trading digital currencies is reportedly the subject of a renewed probe by Federal Authorities in the United States. While a look into Binance is not a new event, the circumstances surrounding the collapse of FTX Derivatives Exchange and the role of Binance’s Chief Executive Officer, Changpeng “CZ” Zhao have pushed prosecutors to seek new information from financial firms.
Per a report published by the Washington Post over the weekend, the renewed probe is being pushed by U.S. attorneys in Seattle according to two sources who reviewed the issued subpoenas.
The massive market share of Binance has made it a subject of scrutiny over the past 4 years. As an insight into how big the exchange is, it recorded a 24-hour trading volume of $13.2 billion according to data from CoinMarketCap. This compares to the $1.86 billion for Coinbase and $575 million for Kraken, 2 trading platforms that have continued to benefit from the collapse of their major rival, FTX US.
Besides the US Attorney’s office in Seattle, the Justice Department’s Money Laundering arm, and the National Cryptocurrency Enforcement Team are also involved in this current probe.
“As has been reported widely, regulators are doing a sweeping review of the entire crypto industry against many of the same issues,” a Binance spokesperson tells Decrypt. “This nascent industry has grown quickly and Binance has shown its commitment to security and compliance through large investments in our team as well as the tools and technology we use to detect and deter illicit activity.”
Binance is being reviewed as may believe the November 6 tweet from CZ stirred the liquidity crunch that finally pushed FTX Exchange into bankruptcy.
Binance Probe: Should Customers be Worried?
At this time, there seems to be no reason for the Binance community to panic as the parent Binance entity is not a US company. Any form of charges may be levied on Binance US, however, sources claim that the prosecutors are not fully convinced that the evidence they have at hand will be enough to file charges against the trading platform.
With respect to the current probe into CZ’s role in fast-tracking FTX’s demise, the crypto veteran has always submitted that a single tweet is not enough to bring down a company unless the firm was already on its way to collapse. In CZ’s tweet, he revealed he will sell off the exchange’s FTT tokens worth over $600 million.
With the FOMO in the community, the price of the FTT coin collapsed, exposing the fragility in the finances of FTX and Alameda Research, both of whose balance sheet was propped up mostly by the exchange’s native coin.
Investigations into Binance date back 4 years and it involves many other allegations including the allowance of US residents to trade derivatives products on its global platform. Binance has maintained that it is handling these probes by cooperating with prosecutors. The trading platform also has a number of former government officials on its payroll to help navigate its complex regulatory landscape.
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