- Binance is grappling with multiple legal and regulatory issues, including a SEC lawsuit alleging deceptive operations and evasion of U.S. securities laws.
- Additionally, in relation to the latest settlement talks, there is a sealed SEC motion linked to a DoJ investigation, and a CFTC case accusing it of evading commodities trading laws.
- The crypto industry anticipates the conclusion of the Binance case, expecting legal clarity but is wary of rumoured tough resolution terms for the exchange.
Binance has been asked to pay over US$ 4 billion (AU$ 6 billion) by the U.S. Department of Justice (DoJ) as part of a resolution to its lengthy investigation into the cryptocurrency exchange, according to a report from Bloomberg News.
Sources cited by Bloomberg as close to the case also claim the resolution’s terms may include possible criminal charges against Binance founder, Changpeng Zhao.
The Justice Department’s investigation into Binance has been running since at least 2018 and has focussed on the exchange’s compliance with anti-money laundering laws. Bloomberg’s sources said the investigation could be resolved as soon as the end of November.
Binance’s Legal Woes
Binance is facing legal and regulatory challenges on several fronts in addition to the DoJ probe. In June the SEC sued Binance and Zhao saying the exchange operates as a “web of deception” and alleging its supposedly independent US operation functions “as part of an elaborate scheme to evade U.S. federal securities laws.”
The SEC also filed a sealed motion against Binance in August, which is an unusual move, and according to former SEC Section Chief John Reed Stark indicates the filing may contain information which could impact the DoJ’s ongoing case against the exchange.
My take is that the secret U.S. SEC filing likely relates to an existing U.S. DOJ investigation of Binance and could, directly or indirectly, describe the heretofore unknown contents of an impending U.S. DOJ Binance-related indictment or an indictment already filed under seal — which the U.S. DOJ would prefer to keep secret.
Additionally, the US Commodity Futures Trading Commission (CFTC) opened a case against Binance in March alleging the exchange has sought to evade compliance with commodities trading laws.
There is also evidence that Hamas terrorists used Binance as a funding source for their attacks on Israel in October, with several Binance-based wallets linked to the terrorist organisation. Binance said it had worked closely with authorities to freeze these accounts.
Resolution Welcomed By Crypto Industry
The crypto community is generally optimistic about the possibility of an imminent conclusion to the Justice Department’s investigation into Binance.
The investigation has long been seen as a source of doubt about the legal status of the world’s largest cryptocurrency exchange. As with the conclusion of the case against FTX and its founder Sam Bankman-Fried, the conclusion of this investigation is viewed as potentially providing certainty and clarity moving forward.
However, some believe it’s unlikely Binance will accept the terms of the resolution as they’re rumoured to include criminal charges against Zhao and admission of wrongdoing, which may impact other investigations and intensify compliance monitoring of the exchange—in addition to the US$ 4 billion payment:
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