Crypto: Binance served Iranian traders after U.S. sanctions, report shows

Yahoo Finance reporter David Hollerith breaks down a new Reuters report that reveals how crypto exchange Binance failed to deliver on promises preventing money laundering and served Iranian crypto traders despite U.S. sanctions.

Video transcript

RACHELLE AKUFFO: Well, crypto hub Binance banned traders in Iran in 2018 after the country was sanctioned by the US. But now at least seven traders have confirmed that they have used the platform until as recently as September of 2021. Yahoo Finance's Dave Hollerith is here to break down what that could mean for the trading platform. So, David, what can you tell us?

DAVID HOLLERITH: So the report comes from Reuters. And it follows previous investigations Reuters has made, looking at the major cryptocurrency exchange's relationship as a hub for organized crime gangs and other criminals, hackers especially. And now Reuters spoke with several Iranian traders who said that after the 2018 sanctions laws were replaced, that they used the Binance platform. And Reuters also cited 11 other people whose LinkedIn profiles indicated that they also used Binance after the sanctions notice.

Additionally, Reuters cited internal chat logs from Binance employees, which suggested that Binance insiders were well aware of what was going on and even joked about it. Now, additionally, the report found Iranian traders accessed the platform, thanks to weak background checks and the use of virtual private networks, or VPNs.

Now, the thing about the VPN situation is that Binance has previously published blog posts on its companies-- on the company's website detailing how to use a VPN. So obviously, that doesn't necessarily look good. There's a little bit of a libertarian bent to some of the early crypto thought leaders in the space.

Now, in-- I would say back to the story's release, CZ, Binance's CEO, came out and admitted to the fact that, over Twitter, that Binance uses, or has used, Reuters WorldCheck tool for IDing customers since 2018. And over email, a Binance spokesperson responded to comments from us and essentially emphasized the fact that compliance and regulatory-- and a strong regulatory program has been a hallmark feature for most of the company's existence.

That being said, they currently do follow all financial sanction laws, the spokesperson told me. And that includes banning users in North Korea and other sanctioned countries.

RACHELLE AKUFFO: We'll certainly be keeping an eye on that story. Thank you for getting us up to speed. Our very own Dave Hollerith.