French authorities have launched an investigation into Binance, the world’s largest cryptocurrency exchange, over allegations of illegal advertising and inadequate anti-money laundering measures. The inquiry, which began in February 2022, is now being studied in depth following a police raid. The investigation focuses on whether Binance advertised its services before being recognized as a digital asset service provider by the French markets regulator. Binance has stated that it complies with all laws in France and other markets where it operates.
The investigation comes at a time when France, under President Emmanuel Macron, has been aiming to attract tech start-ups and investments to Paris. Binance’s CEO, Changpeng Zhao, had met with several French ministers, including Macron himself, and had promised to establish Paris as the company’s European headquarters.
In December, Binance faced a legal complaint filed by lawyers on behalf of multiple plaintiffs for alleged misleading practices, illegal canvassing, and fraud. The seriousness of the case has been recognized by French authorities, leading to several raids. The decision by the French markets regulator to register Binance in May last year contrasted with the reluctance of other European regulators to grant the company a foothold.
On a separate note, Binance has announced its withdrawal from the Netherlands after failing to obtain permission to register as a virtual service asset provider. Last year, the Dutch central bank fined Binance for offering services without proper registration, stating that the company had benefited from a competitive advantage by evading levies and compliance costs.
Binance is also facing significant pressure in the United States, where the Securities and Exchange Commission (SEC) has filed civil charges against the exchange and its CEO, Changpeng Zhao. The SEC alleges that Binance operated unregistered exchanges, misrepresented trading controls, and commingled customer funds with a separate trading firm owned by Zhao.
The lawsuit from the SEC followed a case brought against Binance in March by the Commodity Futures Trading Commission (CFTC), which accused the company and Zhao of operating illegally in the US and soliciting US customers extensively. Binance has stated its intention to dispute both suits filed by US regulators.
The French finance minister, Bruno Le Maire, previously expressed pride in attracting Binance and another platform, Crypto.com, to France. However, critics, such as French member of European parliament Aurore Lalucq, argue that the recent developments warrant a re-examination of Binance’s status and reputation in France.
Additional reporting by Scott Chipolina in Amsterdam
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