Cryptocurrency Faces Another Setback...World's Largest Exchange Hit Hard

U.S. DOJ, IRS, and Binance Exchange Under Investigation
Bitcoin Plummets 6% Instantly

[Image source=Reuters Yonhap News]

[Asia Economy New York=Correspondent Baek Jong-min] Binance, the world's largest cryptocurrency exchange, is under investigation by the U.S. Department of Justice and the Internal Revenue Service (IRS) for money laundering and tax evasion. Following Tesla's announcement a day earlier to suspend Bitcoin payments, the consecutive negative developments have intensified confusion among cryptocurrency investors.

On the 13th (local time), Bloomberg News, citing sources, reported that the U.S. Department of Justice and the IRS are conducting an investigation into Binance. The reason for the investigation is money laundering and tax evasion, according to the news agency. The Department of Justice refrained from providing specific details about the investigation, but concerns have grown that cryptocurrency regulations may be enforced more rigorously.

Bloomberg reported that the U.S. government is focusing on the increasing possibility of illegal transactions amid the expansion of cryptocurrency trading and the potential rise in tax evasion by those who have made significant profits from cryptocurrencies.

Adding to the concerns, news emerged on the same day that Colonial Pipeline, a U.S. oil pipeline company that had suspended operations due to hacking, paid hackers approximately $5 million in cryptocurrency.

A Binance spokesperson stated, "We take our legal obligations very seriously and are cooperating with regulatory and law enforcement agencies," but this was insufficient to ease market concerns.

U.S. media reported that this investigation followed last month’s warning from the German Financial Supervisory Authority, which criticized Binance for insufficient explanations regarding stock tokens that track cryptocurrency-related stocks such as Tesla, Coinbase, and MicroStrategy.

Following Bloomberg’s report, the price of Bitcoin on Binance plummeted from $50,010 to $47,035 (a 6% drop) within an hour.