Cryptocurrency exchange linked to Bermuda probed
A fintech firm that promised to create a global compliance base in Bermuda and invest millions in the island is under investigation by US authorities.
The US internal Revenue Service and US Department of Justice have launched investigations into Binance, the world’s largest cryptocurrency exchange.
Bloomberg reported, based on sources “with knowledge of the matter”, that officials who probe money laundering and tax offences had asked for information on Binance’s business.
The Bloomberg report said: “The officials involved include prosecutors within the Justice Department’s bank integrity unit, which probes complex cases targeting financial firms, and investigators from the US Attorney’s Office in Seattle.
“The scrutiny by IRS agents goes back months, with their questions signalling that they’re reviewing both the conduct of Binance’s customers and its employees, another person said.”
But Bloomberg added that it could not be determined what aspects of the business were under the microscope and emphasised that not all inquiries lead to allegations of wrongdoing.
Jessica Jung, a spokeswoman for Binance, told Bloomberg: “We take our legal obligations very seriously and engage with regulators and law enforcement in a collaborative fashion.
“We have worked hard to build a robust compliance programme that incorporates anti-money laundering principles and tools used by financial institutions to detect and address suspicious activity.”
Binance is incorporated in the Cayman Islands with an office in Singapore and the company signed a memorandum of understanding with Bermuda in 2018.
David Burt, the Premier, said at the time the company planned to create a global compliance base in Bermuda that would create 40 jobs – at least 30 of them Bermudian.
He added the company would also spend up to $10 million to train Bermudians in blockchain technology development and had offered $5 million for investment in new Bermudian blockchain businesses.
The company is not the first Bermuda-linked fintech business to come under scrutiny.
Arbitrade promised to bring hundreds of jobs and pledged to donate $1 million to the Government for a fintech incubator site in 2018.
The company claimed it had “title” to about $19 billion of gold to be used to back four crypto tokens.
But Arbitrade said last August it had divested itself of all interests in the gold and the untenanted Victoria Hall in Hamilton – which was to be the firm’s Bermuda headquarters.
The Ontario Securities Commission earlier this year applied to a court for the continuation of a freeze on some assets controlled by Troy Hogg, a founder of Arbitrade.
The Commission is investigating potential contraventions of Canada’s Securities Act by Mr Hogg, the Ontario corporations Cryptobontix Inc and Arbitrade Exchange Inc, and others.