The world's leading crypto exchange Binance has agreed to a settlement with U.S. regulator FinCEN and agreed to pay a $4.3 billion fine. This was preceded by proceedings against Binance for suspected money laundering cases.
The penalty Binance will have to pay as a result of the settlement represents one of the largest corporate penalties in U.S. history and is the largest money laundering penalty paid to date. FinCEN, the U.S. Financial Crime Enforcement Agency, is sending a clear signal to all financial companies and crypto exchanges in particular. In addition to the fine against Binance, the current CEO, Changpeng Zhao, must leave the company for at least three years and also pay a fine of $50 million. His successor will be Binance's former Regional Head of Markets, Richard Teng.
Binance has been accused of allowing illicit actors to freely trade cryptocurrencies and circumvent U.S. sanctions. According to U.S. Treasury Secretary Janet Yellen, Binance has facilitated 100,000 transactions related to child abuse, illicit drugs, and terrorist financing. Binance has failed to report these suspicious payments. For example, nearly $900 million has been transferred between U.S. users and Iranian users via Binance user accounts without being reported to the authorities.
Binance is the largest crypto trading platform in the world. In 2022, $60 billion worth of cryptocurrencies were traded daily. The $4 billion fine seems relatively small compared to this figure, despite its uniqueness. The $50 million fine imposed on Changpeng Zhao also appears small compared to his fortune of over $10 billion and appears to be more symbolic than a real punishment. In addition to the low penalty against Binance, another fact speaks for the fact that the comparison with FiNCEN only means a black eye for Binance, but not a knockout: through the comparison with FinCEN, Binance is still able to operate as a crypto platform in the USA. The business will only be affected by one condition of FinCEN. Binance will be placed under special supervision by FinCEN for 5 years to ensure that a similar breach cannot occur again. To a certain extent, it is now also up to FinCEN itself that Binance does not become a repeat offender.
Nonetheless, the imposition of this hefty fine on Binance and FinCEN's subsequent scrutiny is a clear signal to the entire crypto world. It shows that the American authority is ready to take tough action against violations in the field of money laundering and financial crime.
After the FTX bankruptcy at the beginning of the year and Sam banker Fried, who was recently convicted in the trial, Binance founder Changpeng Zhao, who is usually referred to as "CZ" in crypto circles, was the sole market leader. Now, as one of the dazzling figures in the crypto world, he too has failed.
The billion-dollar fine against Binance for money laundering violations has had a significant impact on the crypto world. It highlights the need for increased regulation and supervision of crypto exchanges to combat illegal activities. It remains to be seen how this development will affect the crypto market and acceptance of cryptocurrencies.
In another article next week, CURENTIS will provide information on the background to the failure of Sam Bankmann Fried and Changpeng Zhao and its impact on the crypto industry.