Binance faces a U.S. sanctions probe days after its $100 million Circle deal. Circle shares barely moved

Federal prosecutors in Manhattan are investigating Binance's sanctions compliance, Bloomberg News reported on Tuesday, citing people familiar with the matter. According to CoinDesk's account of the report, the Justice Department's criminal division in Washington is working with the U.S. attorney's office on the case, which is looking at whether the exchange let trading go ahead while aware that it violated sanctions law. Yahoo Finance said the focus is sanctions on Iran.

"We maintain a zero-tolerance policy for sanctions violations," a Binance spokesperson told CoinDesk. "We fully cooperate with law enforcement, and we remain committed to rooting out and shutting down bad actors." The Justice Department and the Manhattan U.S. attorney's office did not immediately respond to CoinDesk. No charges have been reported.

Why this is not a first

Binance pleaded guilty to banking compliance violations in 2023 and agreed to pay $4.3 billion. In March it sued Dow Jones, the Wall Street Journal's publisher, over a report that the Justice Department was investigating whether Iran used the exchange to move money, and Senator Richard Blumenthal opened an inquiry in February into alleged sanctions violations of $1.7 billion, which Binance said it found no evidence to support, CoinDesk reported.

The Circle angle: what the filing allows

The timing is awkward for Circle. Binance bought about $100 million of newly issued Circle shares at $80.84 each in a deal that closed September 17, alongside a five-year agreement under which Circle pays Binance to promote USDC, as we reported this morning.

Two details in Circle's 8-K matter more now than they did yesterday:

• The lockup has a legal-order exception. Binance agreed not to sell, pledge or hedge the 1,237,011 shares for two years, but the filing lists "dispositions required by applicable law or governmental order" among the customary exceptions. A forced sale is a remote outcome, but it is written into the deal.
• Either side can walk. Circle and Binance "may each unilaterally terminate" the commercial arrangements "upon the occurrence of certain specified events." The filing does not say what those events are, so investors cannot tell from it whether a criminal case would qualify.

How markets took it

Calmly, so far. Circle shares were at $94.82 at 9:56 a.m. ET, up 0.35% on the day, according to Nasdaq data, near where they closed Monday. Binance's own token, BNB, was at $789.92 on Coinbase, about 0.6% below its 24-hour open of $794.38, while bitcoin traded near $86,100. For crypto traders, the practical question is less about prices today than about counterparty risk at the largest exchange, and the report does not say how far along the investigation is or what penalties are possible.

Live prices are on our crypto page.

Sources: Bloomberg News, as reported by CoinDesk and Yahoo Finance; Circle Internet Group Form 8-K; Nasdaq; Coinbase Exchange. This is market information, not investment advice.