Manhattan Prosecutors Put Binance's "Zero Tolerance" Policy On Trial 🔎

Federal prosecutors in Manhattan are investigating whether Binance knowingly permitted trading on its platform that violated US sanctions on Iran, Bloomberg reported on September 22, citing people familiar with the matter. The US Attorney's Office for the Southern District of New York is leading the inquiry, with the Justice Department's Criminal Division in Washington also involved. The Justice Department and the Manhattan US attorney's office declined to comment.

A Binance spokesperson told Cointelegraph, "We maintain a zero-tolerance policy for sanctions violations. We fully cooperate with law enforcement, and we remain committed to rooting out and shutting down bad actors." The statement did not directly address whether Binance is aware of the reported probe. An investigation does not establish wrongdoing and may conclude without charges being filed.

The current inquiry builds on reporting from earlier this year. On March 27, the Wall Street Journal said the DOJ was examining whether Iran used Binance to evade US sanctions, citing company documents and people familiar with the matter. At the time, it was unclear whether the DOJ was investigating Binance itself, its users, or both, and Binance told Cointelegraph it was not aware of any DOJ investigation.

The sanctions issue has long shadowed Binance. The exchange pleaded guilty nearly three years ago to failing to comply with US banking and sanctions law, paid $4.3 billion, and took on two corporate monitors. Co-founder Changpeng Zhao stepped down as chief executive, served four months in prison, and was pardoned by President Donald Trump last year.

Internal investigators later found more than $1 billion moving through the platform to Iran-linked entities and were dismissed, Fortune reported on February 13. The Wall Street Journal carried the firings on February 23, and the New York Times put the sum sent to Iranian entities at $1.7 billion the same day. Senator Richard Blumenthal opened a preliminary inquiry the following day, demanding records on two entities, Hexa Whale and Blessed Trust. Binance rejected the account in a March 10 post, saying the money neither originated nor terminated on its platform and that at most $126.1 million reached wallets linked to Iran after multiple hops, of which at most $24.1 million reached IRGC-related wallets. Binance has sued the Journal over the reporting.

Last week, Manhattan prosecutors sought forfeiture of $61 million they say came from Iranian black-market oil sales and was laundered through Binance by two Hong Kong-registered companies that misrepresented their business activities. Binance was not accused of wrongdoing in that action. OFAC gave itself the power in August to designate any foreign person operating in Iran's digital asset sector, one of five sectoral determinations issued under a campaign Treasury calls Operation Economic Outcast. Washington sanctioned firms and individuals it says finance Hezbollah and other Iranian proxies on September 10.