Binance regulatory woes mount with fresh probe in France

abdelaziz Fathi

Binance’s operations in France are reportedly under investigation by the country’s regulators under the jurisdiction of the specialized interregional jurisdiction of Paris (JIRS).

The investigation is said to be focused on operating its crypto business before it received regulatory approval in May 2022, as well as implementing poor money laundering checks. A report by French newspaper Le Monde highlights the intensified scrutiny by authorities for the “illegal provision of digital asset services” and “acts of aggravated money laundering”.

The investigation initiated by the Parisian authorities against Binance is part of a recurring pattern of alleged regulatory breaches that have cast a shadow over the exchange’s operations on a global scale.

Binance France holds a digital asset service provider registration, which enables its Paris-based business to offer trading and custody services for cryptocurrencies on its platform. It was supposed to boost Binance’s ambitions in Europe after it has been on shaky ground, with regulators in the UK and elsewhere putting the exchange under intense scrutiny.

The world’s largest cryptocurrency exchange by trading volume was reportedly on the hunt for new headquarters in France. For this purpose, it financed a 100-million-euro initiative together with a local nonprofit entity to support the blockchain and cryptocurrency sector.

Binance’s current predicament adds to the growing regulatory pressures and accusations faced by the crypto exchange in France. The local arm and its global parent were sued last year by fifteen investors who claim the cryptocurrency giant flouted local regulations with misleading commercial practices.

The complaint was filed on December 14 alleging that Binance’s French subsidiary had begun promoting and distributing its cryptocurrency services in the country before obtaining proper authorization.

The plaintiffs shared screenshots showing Binance’s marketing materials in French prior to registering its business with local regulators, including a Telegram channel dubbed “Binance French.”

Binance France is also facing charges for the sale of TerraUSD (USTC) and its sister cryptocurrency Terra (LUNC). The lawsuit lists the controversial algorithmic stablecoin and other tokens that it claims are securities Binance was selling in violation of law, and the buyers were not warned of the risks involved in their purchases.

The complaint further alleges that Binance and its senior management deliberately marketed the troubled project because its global parent had previously invested in it. As a result, the plaintiffs allegedly lost over 2.4 million euros while the exchange was advertising the collapsed token as US dollar-backed.

Investors who purchased UST on Binance were wiped out, learning quickly that, contrary to Binance’s advertisements, UST was not ‘safe,’ ‘stable,’ or ‘fiat-backed, the compliant reads.

In addition, French investors claim that Binance was the “actual seller” when an exchange takes place, crediting and debiting the parties involved in the transaction in its accounts, rather than facilitating a direct exchange between those parties.

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