Crypto company Binance has once again come under legal scrutiny for failing to prevent its platform from being used for crime.
This comes after a 2023 pledge by the company to tighten checks and controls on its platform to prevent it from being used for crime.
In 2023, a US lawsuit was filed against the company for allowing its platform to be used for fraud. This lawsuit resulted in Binance paying a $4.3 billion fine after pleading guilty and promising to make amends.
Suspicious money movements were observed from a leaked internal document, revealing disturbing patterns that should have been flagged, but were left to continue operating.
According to an exclusive Financial Times report, these suspicious money movements were in direct violation of Binance’s agreement to monitor for unlawful funds flows.
Findings from the leaked data
A total of $1.7 billion from 13 highly suspicious accounts was transacted via Binance, with abnormal login patterns originating in Venezuela that weren’t physically possible. The report also exposed significant transfers from users who have been on law enforcement’s radar.
Some of these funds ended up in recipient wallets that Israeli law enforcement authorities later froze because they were linked to Hezbollah and Iranian terrorist activity.
Crypto funds in the range of eight to nine figures were caught in the internally leaked documents, with one originating from a Venezuelan slum moving $93 million from 2021 to date.
One of those users found in the leak was a Venezuelan woman, aged 25, whose account raised huge concerns.
The 25-year-old woman received cryptocurrencies running into $117 million within two years, using over 500 unique account details. She changed her linked accounts 647 times, with these accounts operating through different countries.
A highlight of this report indicated that much of this unlawful crypto flow had been ongoing before Binance’s November 2023 plea agreement with the US Department of Justice.
This is supported by the fact that only $114 million of this $1.7 billion volume was transacted after the plea was made.
Binance’s reaction
The report from Financial Times further stated that, in spite of all these, which have been going on as far back as 2021, Binance has publicly stated that it has a zero-tolerance policy for fraud.
The crypto company has previously told the Financial Times that they’ve implemented strict measures to address and prevent these kinds of fraud operations.
This comes a few months after the founder and former CEO, Changpeng Zhao, finished his four-month jail term after pleading guilty to permitting money laundering on Binance.
Binance has yet to issue an official response to this Financial Times report, and the source of the internal document leak, which apparently implicates someone within the company.
Watch this space
Given the severity of the allegations, including claims involving terrorist activity, the report is likely to draw further legal and regulatory scrutiny.
The French authorities launched an investigation into Binance early this year, highlighting concerns about money laundering, drug trafficking, and fraud.
Binance could be monitored by law enforcement in the coming days, with more information potentially being revealed.
Also read: The UK Treasury is moving to bring crypto under full financial regulation, placing exchanges under Financial Conduct Authority supervision.
