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The world's largest cryptocurrency exchange "changed how it cooperates with law enforcement in many countries around the world, frustrating investigators who say the company has made it harder to find scammers and combat money laundering," the NYT said.
The NYT cited discussions that took place during a June law enforcement conference held in the Netherlands, where police officials from five European countries described difficulties obtaining information from Binance. The exchange still responded directly in cases involving child sexual abuse material, terrorism or an imminent threat to life, according to the report.
Most other requests were being directed through the government of the United Arab Emirates, where Binance has regulated operations, substantially increasing response times, the NYTreported, citing a senior European law enforcement official. Binance’s regulated UAE entities operate under Abu Dhabi Global Market.
"How fast you get your records determines the outcome of your case," Alona Katz, an assistant district attorney in Brooklyn, told the NYT.
Under the policy, foreign law enforcement agencies must route certain requests through Mutual Legal Assistance Treaties, or MLATs. The treaties provide a formal process for governments to exchange evidence and information in criminal investigations, but requests can take considerably longer than direct cooperation with an exchange.
The change represents a departure from Binance’s previous approach, under which it worked directly with authorities to freeze suspicious accounts and provide information about users under investigation, the NYT said.
“Binance has not slowed its cooperation with global law enforcement,” a spokesperson said in an email to CoinDesk. “On the contrary, we have increased our cooperation year over year, while navigating the increasing complexity of government approaches to crypto regulation and data protection.”
The spokesperson said Binance continues to prioritize collaboration with law enforcement agencies worldwide, including in the U.S. and Europe. Binance said its assistance goes “beyond any legal obligation upon us and what traditional financial services firms typically do.”
“This is a deliberate strengthening of the controls and safeguards that govern how we cooperate, which is consistent with the standards expected of a regulated institution,” the spokesperson added.
The NYT's report follows a similar account from The Information this month, which cited a Justice Department (DOJ) memo warning federal prosecutors handling crypto cases that they should prepare for less assistance from Binance when seeking to freeze or seize assets. Binance denied that its cooperation with U.S. authorities had changed.
The DOJ did not immediately respond to a CoinDesk request for comment on the memo.
The news reports come amid continued scrutiny of Binance’s compliance operations. The Wall Street Journal and Fortune reported earlier this year that the exchange had dismissed compliance employees who investigated transactions allegedly connected to Iran. Binance denied the allegations and accused both publications of relying on false or defamatory claims.
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Markets repositioned since June, but Binance held share (~55% user funds, ~24% spot) and drew net inflows in early July while the tracked market saw outflows.
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