Binance Faces $4 Billion Fine, Criminal Charges in US Probe

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Binance Holdings Ltd., the world’s biggest cryptocurrency exchange, is in talks with the US Justice Department to settle a long-running investigation into its activities, according to people familiar with the matter.

The Justice Department is seeking more than $4 billion from Binance as part of a proposed resolution that could also involve criminal charges against its founder, Changpeng Zhao, the people said, asking not to be identified because the discussions are private. The deal could be announced as soon as this month, though the situation is still fluid and the terms could change, they said.

The probe, which began in 2019, has examined Binance’s compliance with US laws and regulations, including its anti-money laundering policies and its handling of customers’ funds. The Justice Department has also looked into Binance’s role in facilitating transactions involving cryptocurrencies that are linked to illicit activities, such as ransomware attacks and tax evasion, the people said.

Largest ever in a criminal case involving cryptocurrencies

Binance, which is incorporated in the Cayman Islands and has no official headquarters, has denied any wrongdoing and said it cooperates with law enforcement agencies around the world. Zhao, who goes by the nickname CZ, has said he is willing to relocate to the US if necessary to resolve the legal issues.

A spokesperson for Binance declined to comment on the negotiations with the Justice Department. A spokesperson for the Justice Department also declined to comment.

If finalized, the settlement would be one of the largest ever in a criminal case involving cryptocurrencies, and a major blow to Binance, which has grown rapidly since its launch in 2017. The exchange offers trading in more than 200 digital tokens and handles more than $20 billion in daily volume, according to its website.

US user account for about 10% of Binance users

Binance has faced increasing scrutiny from regulators and law enforcement agencies around the world, as authorities seek to rein in the booming but largely unregulated crypto industry. In recent months, Binance has been banned or restricted in several countries, including the UK, Japan, Germany and Canada, for operating without proper licenses or violating local rules.

The US is one of Binance’s most important markets, accounting for about 10% of its users, according to CZ. The exchange has tried to appease US regulators by creating a separate entity, Binance.US, that operates under local laws and is overseen by a former top official of the Treasury Department’s Financial Crimes Enforcement Network.

Settlement could help Binance clear legal hurdles in the US

However, the Justice Department’s investigation has raised questions about whether Binance has effectively segregated its US and global operations, and whether it has adequately screened its customers and transactions for potential violations of US sanctions and anti-money laundering rules.

The proposed settlement with the Justice Department could help Binance clear some of the legal hurdles in the US and pave the way for its expansion in the country. The exchange has said it plans to launch an initial public offering in the US in the next three years, following the footsteps of its rival Coinbase Global Inc., which went public in April and is valued at about $68 billion.

Author: Sarah

Sarah Aboje enjoys reading, traveling and learning about new things.