A Compliance Employee’s Shocking Statement
An employee at Binance, the world’s largest cryptocurrency exchange, allegedly wrote a disturbing message implying that the exchange was facilitating money laundering. The message said, “We need a banner ‘is washing drug money too hard these days—come to Binance we got cake for you.”
Binance’s Lack of Compliance
Court documents reveal that Binance prioritized growth and profits over compliance with US laws. It failed to implement proper anti-money laundering (AML) protocols and did not monitor transactions or report suspicious activity to FinCEN, a US financial watchdog. Instead, Binance focused on attracting high-volume US customers who could trade large amounts without providing sufficient identification. This led to Binance becoming the largest cryptocurrency exchange in the world.
A Criminal Enterprise
According to Attorney General Merrick B. Garland, Binance achieved its success through criminal activities. It allowed illicit actors to use its platform for various illegal purposes, including disguising the source of digital assets, transferring ransomware proceeds, and facilitating darknet market transactions. Binance failed to report over 100,000 suspicious transactions involving terrorist groups and other illegal activities.
Willful Disregard for Regulations
Binance was required to register with FinCEN and implement an effective AML program. However, it chose to prioritize personal wealth and growth over following financial regulations. As a result, it allowed US users to trade with individuals in sanctioned countries like Iran, causing millions of dollars in illegal transactions.
A Historic Penalty
In light of its violations, Binance pleaded guilty and agreed to pay a record-breaking penalty of over $4 billion. This settlement resolves investigations related to violations of the Bank Secrecy Act, failure to register as a money transmitting business, and other offenses. Binance’s founder, Changpeng Zhao, also pleaded guilty and resigned as CEO. The company’s settlement resulted in significant client fund outflows.
Hot Take: A Landmark Moment for the Crypto Industry
Binance’s guilty plea and the massive financial penalty send a clear message to the cryptocurrency industry: compliance with US law is non-negotiable. The coordinated resolutions with multiple regulatory agencies mark a milestone for the virtual currency industry. Institutions that wish to benefit from the US financial system must adhere to regulations designed to prevent terrorism, crime, and threats from foreign adversaries. Failure to do so will result in severe consequences. Binance’s legal issues with the SEC are still ongoing, further highlighting the need for crypto companies to comply with all applicable laws and regulations.
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