EU probes Binance over 'reverse solicitation' exemption use

European regulators are investigating Binance for its alleged misuse of the 'reverse solicitation' exemption under the Markets in Crypto-Assets (MiCA) regulation. This exemption permits overseas operators to serve EU customers without a license, provided the services are exclusively requested by the client without prior advertising or promotional activity.

Binance faces scrutiny from the European Securities and Markets Authority (ESMA) and national regulators in France, Germany, and Greece after failing to secure a MiCA license before the July 1 deadline. ESMA has emphasized that the 'reverse solicitation' exemption is narrowly framed and should not be used to circumvent MiCA requirements.

The exchange withdrew its MiCA application in Greece in June and has reportedly been operating in the EU through various workarounds, including serving customers via an entity regulated in Abu Dhabi. Regulators have requested information from Binance and warned that enforcement actions, including fines, could follow if they are not satisfied with the exchange's response.

Separately, Binance is also under investigation by the US Department of Justice for potential Iran sanctions violations.