Binance Settles with Regulators

World’s Largest Cryptocurrency Exchange to Pay Record Fine

📅 November 21, 2023

Binance, the world’s largest cryptocurrency exchange, on November 21^st pleaded guilty and agreed to pay more than $4.3 billion to resolve the US Justice Department’s investigation into its violations of the Bank Secrecy Act (BSA) and US sanctions, as well as other criminal activities.

Binance’s founder and chief executive officer (CEO), Changpeng Zhao (known as CZ) also pleaded guilty to failing to maintain an effective anti-money laundering (AML) program and has resigned as CEO of the company.

Binance’s guilty plea is part of coordinated resolutions with the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) and Office of Foreign Assets Control (OFAC), as well as the Commodity Futures Trading Commission (CFTC).
Binance’s penalty is one of the largest in US history, and Attorney General Merrick Garland noted that the company became the world’s largest cryptocurrency exchange in part because it violated US laws. Treasury Secretary Janet Yellen added that Binance’s willful criminal acts allowed terrorists, illicit cyber actors, and other malign actors to obfuscate the origin of illicit funds.
Binance also knew that US sanctions laws prohibited US persons from transacting with its sanctioned customers, including customers located in comprehensively sanctioned jurisdictions, such as Iran. Nonetheless, Binance did not implement controls that would prevent US users from trading with users in Iran and willfully caused more $898 million in trades between US users and those located in Iran.
Binance also had significant exposure to Russian illicit finance, even after Russia’s invasion of Ukraine in 2022. In addition to allowing US persons to transact with embargoed jurisdictions illegally annexed by Russia, the platform also processed transactions for sanctioned Russian exchanges and ransomware actors.

Continue reading about this significant regulatory action in our latest Expert Insight: Binance Settles with Regulators in which we discuss Binance’s violations of US law, including the Bank Secrecy Act and OFAC sanctions.

The report delves into the company’s efforts to obscure its violations and help its VIP customers alter their KYC documents to avoid regulatory scrutiny. In addition, this assessment highlights some of the lessons virtual asset service providers (VASPs) can learn from these recent regulatory actions and possible mitigating strategies financial institutions can use to reduce their vulnerabilities when transacting with companies such as virtual currency exchanges and new financial technologies that can present additional compliance risks.

View the Report

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