(Bloomberg) -- Binance said it exited its Russia business by selling it to CommEX, a crypto exchange that says it officially launched on Tuesday.
“As we look toward the future, we recognise that operating in Russia is not compatible with Binance’s compliance strategy,” Noah Perlman, Binance’s chief compliance officer, wrote in a blog post on the company’s website published Wednesday. The company didn’t provide financial terms.
The world’s largest exchange is being investigated by the US Justice Department to determine if it was used illegally to let Russians skirt sanctions and move money. The inquiry includes looking at whether Binance or company officials ran afoul of sanctions related to Russia’s invasion of Ukraine. Two executives in charge of the Russia business this month said they left Binance, adding to a raft of senior departures.
Read more: Binance Faces US Probe of Possible Russian Sanctions Violations
Binance and its founder, Changpeng “CZ” Zhao, have been the subject of intense regulatory scrutiny over the past year, with the Securities and Exchange Commission and the Commodity Futures Trading Commission filing lawsuits against both. The exchange says it has more than 150 million registered users globally, although its market share has shrunk since the CFTC sued Binance in March.
Payments in cryptocurrency as well as digital-asset exchanges are prohibited on Russian territory. However, Russian citizens and companies are free to use offshore crypto platforms as a settlement instrument for transferring funds abroad and receiving funds from abroad.
CommEX was launched on Thursday, according to its website, which stated its parent company CommEX Holding Ltd. is based in the Seychelles. Both Binance and CommEX use Hong Kong law as the governing rules for their platforms, according to their respective terms of service. CommEX is prohibited from offering services in the US, most of the countries in the European Union and other nations and territories including Singapore, Iran, Cuba, Syria, North Korea and Crimea, according to its service terms.
“Neither Binance nor its executives have shares or profit-sharing with CommEX,” Binance spokesperson Simon Matthews said in a text message to Bloomberg News.
“To ensure a smooth process for existing Russian users, the off-boarding process will take up to one year,” Binance said in the post. It added that it will not “maintain any option to buy back shares in the business,” in Russia.
--With assistance from Sidhartha Shukla.
(Updates to add Binance comment, CommEx location in seventh and eighth paragraphs.)
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