Binance is under investigation for possible money laundering and criminal sanctions violations. Apparently the DOJ hasn’t done an indictment yet because it could cause a run on the exchange and hurt customers.
Binance's defense attorneys at U.S. law firm Gibson Dunn have held meetings in recent months with Justice Department officials, and argued that a criminal prosecution would wreak havoc on a crypto market already in a prolonged downturn. The discussions included potential plea deals.
The anonymous source said, “Prosecutors are considering other options, such as fines and deferred or non-prosecution agreements.”
Ultimately, the Justice Department could bring indictments against Binance and its executives, negotiate a settlement, or close the case without taking any action at all.
An inside source told Reuters that to actually bring the charges, three DOJ offices need to agree, the Money Laundering and Asset Recovery Section (MLARS), the US Attorney’s Office, and the National Cryptocurrency Enforcement Team. One of them is holding out.
The investigation began in 2018 and is allegedly focused on US AML and OFAC violations.
CZ is said to have enforced strict secrecy rules on employees, telling them to use email as little as possible and to communicate using encrypted messaging services.
Crystal Blockchain, an Amsterdam cryptanalysis and tracing firm put out a report that between 2017 and 2022, the buyers and sellers on Hydra, a russian darknet site for drugs, used Binance to make and receive crypto payments worth $780 million.
Binance boasts 150 million users
SEC complaint alleges 1.47 US citizens use Binance.com and CZ encouraged them to onboard through obfuscated ways (probably VPN).
Binance global purged all its American customers in 2019
Binance.US 24 hr. volume $15,268,286
Binance Global 24 hr. volume $9,111,199,146
September 2020 - Lazarus hackers thought to have stolen money from a Slovakian exchange and opened dozens of anonymous accounts on Binance to launder the funds and use the money to buy North Korea weapons. Binance said it had no idea.
August 2022 – Binance moved $1.8 billion stablecoin collateral, which started rumors that BUSD was under-collateralized. (Link)
March 27, 2023 – CFTC charged Binance and CZ with willful evasion of fed law and operating an illegal digital asset derivatives exchange. Alleged that CZ was trading against Binance users. (Link).
May 6, 2023 – DOJ launches probe into Binance for violating Russia sanctions. (Link).
June 5, 2023 – SEC files 13 charges against Binance. Targets BUSD and BNB as unregistered securities. Requests temporary restraining order against Binance, Binance.US, and CZ. (Link)
June 12, 2023 - Binance hired George Canellos, a former SEC enforcement lawyer (Link).
July 7, 2023 - Several of Biance’s top compliance staff resigned (Link).
General Counsel Han Ng,
Chief Strategy Officer Patrick Hillmann,
Senior Vice President for Compliance Steven Christie
Global Vice President of Marketing and Communications Steve Milton
Senior Director of Investigations Matthew Price's
July 31, 2023 - Binance got first Operational MVP License in Dubai (Link).
August 1 – Binance Japan launch (Link)
Charges by the DOJ could include:
Money Laundering (20 years)
Moving money into or out of the US,
Knowing money is involved in a crime.
Wire Fraud (20 years)
Scheme to defraud someone out of money,
Reasonably foreseeable that interstate wire communications would be used.
Commodities Fraud (25 years)
Fail to register with CFTC,
perform transactions with no economic purpose other than self- profit,
who provide false or misleading information to customers, or
who steal customer funds.
Securities Fraud (25 years)
using manipulative or deceptive tactics to purchase or sell a security.