Insights and analysisEditorial office

Is Binance in trouble? U.S. authorities seized $1.8 million in crypto from six exchanges’ accounts in a drugs crackdown

Tanja Nechet

News editor

Feb 27, 2023 at 05:31

The U.S. District Court for the Eastern District of Michigan granted a civil forfeiture of digital assets seized in May 2022 as part of a cash-flow disruption operation that funneled drug proceeds to Mexico. 

The case involves Bitcoin (BTC), Tether (USDT), and Ethereum (ETH). The drug proceeds were used on Binance to purchase a cryptocurrency, which was then sent to an address controlled by a criminal organization in Mexico. 

The Drug Enforcement Agency (DEA) and Binance are cooperating and exchanging information about possible criminal activity on the trading platform. However, the latest $1.8 million cryptocurrency seizure is just the tip of the iceberg. 

Forbes reports that according to a U.S. Drug Enforcement Administration investigation, a gang of methamphetamine and cocaine traffickers operating in the United States, Mexico, Europe, and Australia used the world’s largest cryptocurrency exchange, Binance, to launder tens of millions in drug proceeds. The DEA alleges that between $15 million and $40 million in illicit proceeds may have been funneled through Binance since 2020.

The brand new newsletter with insights, market analysis and daily opportunities.

Let’s grow together!

In 2021, a Mexican national named Carlos Fong Echavarria pleaded guilty to charges of drug trafficking and money laundering involving about $4.7 million in cryptocurrency.

Binance has a tense relationship with the U.S. authorities

The U.S. Securities and Exchange Commission (SEC) recently forced Paxos to stop issuing Binance’s stablecoin, BUSD.

A few days ago, the SEC blocked Voyager’s acquisition of Binance. And Voyager’s token, VGX, was deemed an unregistered security.

In January, the U.S. Department of Justice (DoJ) closed the crypto exchange Bitzlato, two-thirds of whose major counterparties were associated with darknet and fraud. Binance has been named one of Bitzlato’s largest partners. Between May 2018 and September 2022, the platform received the most bitcoins from the banned crypto exchange.

By the way, the Binance zero commission on Bitcoin trading and the collapse of FTX led to the fact that the market share of the exchange in the volume of spot BTC trading has reached 98% this year.

Is Binance severing ties with U.S. partners?

According to a Bloomberg report, Binance Holdings is considering severing its ties with U.S. business partners as various government agencies and regulators continue to investigate the company.

The exchange is also considering delisting tokens issued by U.S. projects, including the stablecoin Circle USDC. However, Binance CEO Changpeng “CZ” Zhao denied that the exchange is considering delisting tokens associated with U.S. projects.

The news that Binance Holdings may refuse to cooperate with U.S. partners came after Reuters published a report that Binance, which is not licensed to operate in the United States, secretly transferred more than $400 million from accounts belonging to its U.S. partner, Binance.US. According to the news agency, the beneficiary of the payment was Merit Peak, a trading company run by Zhao.

Binance’s U.S. clients are served via Binance.US, which claims to operate entirely independently and has no plans to leave the United States.

All information provided on this website is for educational and informational purposes only. Please consult with our Disclaimer.

Home » Insights and analysis » Is Binance in trouble? U.S. authorities seized .8 million in crypto from six exchanges’ accounts in a drugs crackdown

Your complaint has been sent to a moderator