Binance, the world’s largest cryptocurrency exchange, is under investigation by French authorities for the alleged illegal provision of digital-asset services and acts of aggravated money laundering, according to an official for the Paris public prosecutor’s office.
Binance had an on-site visit by French authorities last week, a spokesperson for the exchange said in a statement. “In France, on-site visits by regulators and inspectors are part of regulatory obligations to which all financial institutions must adhere,” the spokesperson added, declining to comment on specifics of law enforcement or regulatory investigations. “We abide by all laws in France, just as we do in every other market we operate.”
The French probe adds to the mounting list of regulatory challenges Binance is facing around the world, as watchdogs ramp up their scrutiny of the cryptocurrency sector. Also on Friday, Binance said it was leaving the Netherlands after failing to register with the country’s financial authorities. The company said on Friday that it couldn’t obtain registration as a virtual asset service provider “although we explored many alternative avenues to service Dutch residents in compliance with Dutch regulations.”
Read more: Binance Exits Netherlands After Failed Registration Attempt
Earlier in June, the US Securities and Exchange Commission sued Binance and Chief Executive Officer Changpeng “CZ” Zhao for allegedly mishandling customer funds, misleading investors and regulators, and breaking securities rules. The case follows a lawsuit from the US derivatives watchdog in March that alleges Binance and Zhao routinely broke its rules. The company has called the actions “disappointing” and vowed to defend itself against the allegations.
Read more: Binance CFTC Suit Is Latest Slap From Global Watchdogs: Timeline
While Binance says it has no defined global or regional headquarters, it chose Paris as its European hub last year after obtaining a digital-asset service provider registration from the French markets authority AMF, in what was the exchange’s first major approval from a G-7 member nation. The company added more than 150 permanent positions in France over the past year, and had said it was making a 100-million-euro ($105 million) investment into the nation’s blockchain ecosystem.
Read more: Binance Secures French Regulatory Nod in European Push
The company’s decision to set up its European hub in Paris was seen as a win for the French government’s push to establish the country’s capital as a hub for cryptocurrency and fintech companies. Zhao, meanwhile, had lauded the country as one of the “pro-crypto” jurisdictions.
In April, European lawmakers gave their final blessing to the EU’s Markets in Cryptoassets, or MiCA, a law that will give the bloc its first rules to govern the crypto industry. This regulation is the first time that governments have tried to supervise the nascent industry on such a scale and follows the collapse of several big participants including the crypto exchange FTX.
At an event in Paris Friday, Bank of France Governor Francois Villeroy de Galhau said international cooperation is needed to regulate crypto conglomerates, adding that a new version of the EU regulation, “MiCA 2”, would probably be needed to tackle these firms.
CoinDesk reported the French probe earlier Friday.
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--With assistance from Tanzeel Akhtar.
