The IRS and DOJ have served subpoenas and warrants on Binance and ex-staff; the investigator has also been subpoenaed by a federal grand jury.
A former senior financial crimes investigator at Binance has told the US Internal Revenue Service (IRS) company leadership wilfully ignored calls for an internal investigation into roughly 2,000 accounts suspected of being used by individuals in Iran, according to a search warrant obtained by Forbes. Those accounts moved about $1.2bn across the exchange.
The investigator told IRS agents in May he left Binance shortly after it suspended him and several colleagues over an investigation into two accounts which appeared to be sending money to Iran in breach of US sanctions.
The warrant, which was issued for his MacBook, states the wider internal investigation he called for was code-named “Operation Loclock”.
Gregory Bernstein, a partner at Keller Anderle Scolnick who represents the investigator, said his client has also been subpoenaed to testify before a federal grand jury in the District of Columbia. “There is substantial evidence that Binance helped evade sanctions and launder more than a billion dollars from China to Iran and Iran-backed entities,” Bernstein said.
The company has maintained it broke no Iran sanctions and it dismissed the investigators “validly for breaching company policy regarding data privacy.”
Dugan Bliss, Deputy General Counsel at Binance, added: “We fully cooperate with law enforcement, and we remain committed to rooting out and shutting down bad actors.”
The crypto exchange did not respond to the claim its leadership declined to pursue Operation Loclock.
Blessed Trust account paid Binance salaries, investigator says
The IRS and the US Department of Justice (DOJ) have served multiple subpoenas and warrants on the company and on some of the former investigators. The federal investigation centres on the laundering of Chinese purchases of Iranian oil through Binance and extends to two Chinese customers, Hexa Whale and Blessed Trust, which allegedly moved funds into crypto wallets later tied to Iran’s Islamic Revolutionary Guard Corps (IRGC).
In September, the DOJ sought forfeiture of $61m in cryptocurrency, alleging the two companies used Binance to launder proceeds from black-market sales of Iranian oil.
The investigator told the IRS he had gathered evidence a Blessed Trust account was sending funds to Iran while also paying Binance expenses such as salaries. the crypto exchange stopped working with Blessed Trust earlier this year.
He also said a search of his MacBook would turn up communications showing the company knew Iranians were using the platform, along with messages from Binance’s Chief Compliance Officer arguing none of the dismissed investigators had done anything wrong. No charges have yet been filed.
Binance lost about $6.36bn across ten blockchains on 29 October in a hack TRM Labs attributed to North Korea’s TraderTraitor unit, and which the FBI has since blamed on North Korea.
The crypto exchange has been unable to serve EU customers since 1 July, after it withdrew its application for a licence under the Markets in Crypto-Assets Regulation (MiCA) in Greece.
Outgoing European Central Bank (ECB) President Christine Lagarde personally intervened to block the application.
