French authorities have escalated their scrutiny of Binance, the world’s largest cryptocurrency exchange, by launching a judicial probe into allegations of money laundering, tax fraud, and other financial crimes, Reuters reported.
The investigation, announced on Tuesday by the economic and financial crime section of the Paris prosecutor’s office (JUNALCO), spans the period from 2019 to 2024 and involves alleged offenses committed in France and across the European Union.
According to JUNALCO, the investigation includes allegations of money laundering linked to drug trafficking.
Binance has denied the charges, with a spokesperson stating, “Binance fully denies the allegations and will vigorously fight any charges made against it,” describing the accusations as “several years old.”
User complaints lead to probe against Binance
The French probe follows complaints from Binance users, who allege they lost money due to misinformation and unlicensed trading activities by the platform.
Prosecutors said Binance was trading without necessary regulatory approvals, adding to the list of legal challenges the crypto exchange faces globally.
In June 2023, the Paris prosecutor’s office opened a preliminary investigation into Binance for illegal client solicitation and “aggravated money laundering.”
At the time, Binance’s founder, Changpeng Zhao, dismissed the news as “FUD” (fear, uncertainty, and doubt), a common term in crypto circles to undermine negative news.
Binance under global regulatory scrutiny
The French investigation is just one of many legal and regulatory challenges facing Binance.
In 2022, the company’s founder and former CEO, Changpeng Zhao, was sentenced to four months in prison after pleading guilty to violating US anti-money laundering laws.
Binance agreed to pay a record $4.3 billion penalty in connection with the case.
US prosecutors accused Binance of operating a “Wild West” model, enabling criminal activities and failing to report over 100,000 suspicious transactions linked to terrorist groups.
Additionally, this month, the US Supreme Court allowed another lawsuit against Binance to proceed, involving allegations of selling unregistered tokens that lost significant value.
Binance is also under investigation in Australia, where regulators allege the platform misclassified retail clients as wholesale clients, depriving them of legal protections.
Regulators have long flagged cryptocurrency’s potential role in enabling financial crimes.
The Financial Action Task Force (FATF), a global watchdog against money laundering and terrorism financing, has warned that crypto assets could become a “haven” for illicit financial transactions.
The cryptocurrency industry suffered a major blow in 2022 when several high-profile firms collapsed amid fraud and misconduct, leaving investors with significant losses.
Despite these setbacks, crypto prices have rebounded in recent months, partly driven by President Donald Trump’s pro-crypto stance.
As Binance faces growing scrutiny worldwide, the French probe underscores the urgent need for tighter regulation in the cryptocurrency sector, which remains a focal point for both innovation and controversy.
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