Binance to pay $4.3 billion in fines for money laundering violations
By Ryan General
November 23, 2023
Binance is set to pay an unprecedented $4.3 billion in fines and restitution after
Settlement details: The settlement involves agreements with the Justice Department, the Treasury Department and the Commodity Futures Trading Commission (C.F.T.C.), which all started their investigation on Binance years ago, according to The New York Times.
As part of the deal, Binance will pay $1.81 billion within 15 months and a further $2.51 billion forfeiture. Founder Changpeng Zhao, who also pleaded guilty, has agreed to a $50 million fine and to step down as CEO.
Evading laws: According to court documents, Zhao and senior Binance employees were involved in a wide-ranging scheme to avoid complying with regulations requiring financial institutions. This includes evading laws on identifying customers’ true identities, refraining from doing business with criminals and registering U.S.-based businesses with regulators. It was revealed that customers from sanctioned countries — including Cuba, Iran and Syria — were able to access the Binance platform.
Failure to institute proper controls: Treasury officials highlighted Binance’s failure to report suspicious transactions involving terrorist groups such as Hamas, Al Qaeda and ISIS, reported Reuters. The court filings also revealed that Binance conducted business with U.S.-based firms, violating anti-money laundering laws that required a separate platform, Binance.US, to handle such transactions.
Zhao’s future: Zhao’s bail was set at $175 million, secured by $15 million in cash. Despite stepping down as Binance’s CEO, he will retain a presence as a major stakeholder. However, his future remains uncertain, with his sentencing set for Feb. 23, 2024. While he faces up to 18 months in prison, prosecutors are moving for a stiffer penalty.
Regulatory scrutiny: Regulatory actions against Binance began earlier this year, with the C.F.T.C. filing a civil suit in March, followed by the S.E.C. charging Binance and Zhao with mishandling customer funds and providing false information to regulators. The S.E.C. is not a party to the recent settlement.
The penalty imposed on Binance is one of the largest ever by the U.S. government against a financial firm. The plea deal appears to give Binance the opportunity to continue its operations under the oversight of a government monitor.
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