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Binance also under investigation in France

Friday, June 16, 2023

The French subsidiary of the world's largest crypto exchange platform is suspected of "aggravated money laundering" and of operating illegally in France before obtaining its registration as a PSAN.

It's not just the US justice system that's interested in Binance. According to our information, which confirms that of the "Monde", the exchange platform of Chinese origin is also being targeted by the French justice system, which suspects it of "aggravated money laundering" and illegal activity.

An investigation has been underway since February 2022 and is being conducted by the financial judicial investigation department under the direction of the specialised inter-regional court in Paris. A search took place last week at the premises of the French subsidiary. According to Agefi, a second investigation has also been launched by the Direction générale de la Concurrence, de la Consommation et de la Répression des fraudes (DGCCRF).

"We had our offices visited last week by the relevant authorities. Binance, as always, has been fully cooperative and we have fully complied with our obligations," confirmed a spokesperson for the crypto giant.

Contacted by The Big Whale, the public prosecutor's office declined to comment. The investigation could lead to legal action as in the US with the SEC. But what exactly is the subsidiary headed by David Prinçay (read his interview published on 1 June) being accused of?

Firstly of failing to meet its obligations in terms of so-called 'know your customer' (KYC) procedures, aimed at checking the identity and profile of its customers to prevent the risks of money laundering. "The US regulator is accusing them of the same thing for some of their customers", says Arnaud Touati, a partner at Hashtag Avocats.

"It should be remembered that until it was registered as a digital asset service provider (DASP) in France in May 2022, the platform had no KYC/AML procedure obligations", he points out.

When asked about the fact that Binance did not verify the identity of its French customers until August 2021, its chairman David Prinçay had told The Big Whale "we have only followed the regulations".

"We comply with all the laws in France, as we do in all the other markets in which we operate," added a spokesperson for the company.

Suspicions of illegal advertising

Then, according to Le Monde, Binance is suspected of having illegally advertised in France before being authorised to do so.

"In France, only NSPs registered with the Autorité des marchés financiers (AMF) can carry out promotional communication operations on the services and digital assets they offer," notes Arnaud Touati.

Remember that Binance had ostensibly chosen to display its logo on the front of the Palais Brogniart, located opposite the headquarters of the Autorité des marchés financiers (AMF) in mid-April 2022, before having obtained its registration. An act that caused quite a stir at the time...

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A case linked to customer complaint in late 2022?

A investigation published in December 2022 by Mediapart had revealed that several French customers of Binance had lodged a complaint on similar grounds to those of the current investigation. At the centre of this was a Telegram group that was active before the PSAN registration and offered numerous commercial incentives.

Binance denied being the administrator. It was allegedly run by "Binance Angels".

Angels are "volunteers", as David Prinçay had explained to us. He himself was one before taking over as Chairman of the subsidiary. "I helped them, particularly with translations. That's how I began to understand how Binance worked, what its corporate culture was, etc."

In this case, the investigators will have to establish in particular whether or not the actions of the Binance Angels depend on the company's responsibility.

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Cette analyse n'est pas un conseil en investissement. Elle a été rédigée sans prendre en compte votre situation personnelle et notamment votre situation financière, votre profil de risque et vos objectifs d’investissement.

Avant d’investir dans un produit, l’investisseur doit comprendre entièrement les risques et consulter ses propres conseillers juridiques, fiscaux, financiers et comptables.

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