Binance in trouble in French waters – Money laundering, tax fraud, drug trafficking

Binance has been hit with another legal blow in less than two years. Today, French investigators announced the start of a judicial investigation into the world’s largest crypto exchange, which included allegations of tax fraud, money laundering, and drug trafficking.

According to the Paris public prosecutor’s office (JUNALCO) the investigation is looking into crimes that happened from 2019 to 2024. 

🚨BREAKING: FRENCH INVESTIGATORS HAVE OPENED A JUDICIAL PROBE INTO BINANCE FOR MONEY LAUNDERING, TAX FRAUD, AND DRUG TRAFFICKING pic.twitter.com/2gzWkQBmra

— Crypto Beast (@cryptobeastreal) January 28, 2025

The Paris Public Prosecutor’s Office started investigations into serious money laundering and illegal digital asset services. In as early as 2023, local authorities performed on-site investigations. They looked into transactions suspected of profiting from fraud or organized crime.

The prosecutor’s office said that what prompted the investigation was users’ complaints of losing money after spending on the platform. To add to that, the information given had been incorrectly communicated.

French prosecutors argued that the platform had been trading without obtaining the necessary approvals.

According to available information, the investigation is not just in France but also in all EU countries. Binance is yet to respond to the allegations.

Binance shareholders- Do they have a chance of a win?

Questions about Binance’s position in Europe have spiked. The exchange has lost licenses in the Netherlands, Belgium, the UK, and Germany. Executives decided to cancel certain license applications because of strict anti-money laundering regulations.

There are also signs that current investigations in France might make getting approval under the Markets in Crypto-Assets (MiCA) regulations a little more difficult.

A criminal charge related to ownership could risk losing approvals from French officials, making it harder to expand in Europe.

Last May, two new owners took his place. Apparently, French law states that thieves cannot own most of a company’s shares.

Zhao, being the only owner of Binance Franc,e would have stopped the exchange from working in the country. This is because of his previous records. Now, the French business registry shows the Binance France shares are split between Yulong Yan and Lihua He. They both hold 50% each. 

Binance had made a home in France. The country has reserved the exchange as an important strategic hub in Europe over the past years. In addition, Binance invested $104 million in the French crypto industry. However, the exchange has faced several challenges in the country over the past few years.

Binance’s myriad of lawsuits

The crypto exchange is still facing other cases. In December 2024, Australia’s corporate police announced that they had filed a lawsuit against Binance’s local derivatives business. The complaint stated that retail customers were wrongly classified as wholesale clients, which meant they did not receive the consumer protections they should have.

The Australian Securities and Investment Commission (ASIC) claimed that the company provided crypto derivative goods to 505 retail investors, around 83% of its local customers. These investors were wrongly labeled wholesale clients from July 2022 to April 2023.

In addition, in the middle of this month, the US Supreme Court rejected a request from Binance and its founder, Changpeng Zhao, to stop a case. Investors were suing them. They claimed that the biggest crypto exchange sold unregistered tokens that dropped significantly in value.

The 2nd US Circuit Court of Appeals in Manhattan decided that US securities rules applied to Binance, although it’s not a US company. This is because once investors in the US buy tokens, those purchases cannot be reversed.

The judges decided not to hear Binance and Zhao’s appeal against a lower court’s ruling. This allowed the class action to move forward.

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