US prosecutors probe whether Binance knowingly allowed Iran-linked trades: report

U.S. federal prosecutors are investigating whether Binance violated sanctions on Iran by failing to stop certain trading on its platform, Bloomberg reported on Monday, citing people familiar with the matter. The Manhattan U.S. attorney's office is handling the inquiry. The Justice Department's criminal division in Washington is also involved. Authorities are examining whether Binance knowingly allowed the trading. The transactions under examination were not clear. Justice Department investigations can close without charges being filed. Spokespeople for the department and the Manhattan U.S. attorney's office declined to comment. Binance said it maintains a zero-tolerance policy for sanctions violations. The exchange said it is committed to rooting out and shutting down bad actors and cooperates with law enforcement. Binance pleaded guilty almost three years ago to failing to comply with U.S. banking and sanctions law. It 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. Fortune reported on February 13 that internal investigators had found more than $1 billion moving through Binance to Iran-linked entities and were then dismissed. The Wall Street Journal reported the firings on February 23. The New York Times reported the same day that the amount sent to Iranian entities was $1.7 billion. Senator Richard Blumenthal opened a preliminary inquiry the following day and demanded records on two entities, Hexa Whale and Blessed Trust. Binance rejected that account in a March 10 post. The exchange said the money neither originated nor terminated on its platform. Binance said that at most $126.1 million reached wallets linked to Iran after multiple hops. It said that at most $24.1 million of that reached wallets linked to Iran's Islamic Revolutionary Guard Corps. Binance said the Iranian links surfaced only after it had begun investigating. The exchange said no employee was dismissed for escalating compliance concerns. Binance separately told Blumenthal that its compliance process had been effective. The exchange has sued the Wall Street Journal over the reporting. Both entities named by Blumenthal resurfaced last week, when Manhattan prosecutors sought forfeiture of $61 million that they said came from Iranian black-market oil sales and was laundered through Binance. Prosecutors said two Hong Kong-registered companies 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, wherever the person is based. The power was one of five sectoral determinations issued under a campaign that the Treasury Department calls Operation Economic Outcast. Washington sanctioned firms and individuals on September 10 that it said finance Hezbollah and other Iranian proxies.