Binance Under DOJ Scrutiny for FTX Related Crypto Holdings

• The U.S. DOJ seeks to seize $16M in crypto from a Binance account. 
• More than half of the tokens in the account were Solana.

The U.S. Department of Justice (DOJ) has registered a civil forfeit lawsuit to recover $16 million worth of crypto assets, assumed to be linked to the controversial crypto exchange, FTX and its founder Sam Bankman-Fried. 

Among the crypto assets, more than half of the assets were held in Solana (SOL), amounting to around $8.5 million. The other cryptocurrencies include Internet Computer (ICP), Avalanche (AVAX), Ripple (XRP), and Cardano (ADA).

Notably, the DOJ claims that suspicious transactions were found within the Binance account, including near-daily stablecoin and Bitcoin deposits, which were converted into other assets employing over-the-counter (OTC) transactions. 

While Binance is not directly accused, the DOJ’s investigation mentions the exchange’s role in facilitating transactions linked to illicit activities. The funds held in the Binance account have increased in value due to the recovery of the crypto market. 

The Alleged Scheme

These assets are believed to derive from a transfer orchestrated by Bankman-Fried in late 2021. As per the lawsuit, Bankman-Fried authorized the transfer of 40 million USDT from the Alameda Research wallet, intending to offer bribes to Chinese officials. 

The move was reportedly part of the effort to unfreeze $1 billion worth of cryptocurrency assets frozen on two Chinese exchanges. Besides, the funds were traced through several private wallets. It eventually ended up in a Binance deposit account, whose activity spanned from December 2021 to December 2023. 

The Legal Battle

Despite the conviction of Bankman-Fried’s seven criminal charges, which include fraud and money laundering, the DOJ investigation into assets linked to FTX remains ongoing. Moreover, Bankman-Fried currently serving a 25-year sentence, has filed an appeal against his conviction. It claims that he was presumed guilty before he was even charged. 

The case adds more complexity to the ongoing asset recovery efforts for FTX creditors. As the FTX bankruptcy proceedings open, the firm has filed a lawsuit against Binance and its CEO, Changpeng Zhao to recover $1.8 billion in transferred assets. 

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