Binance, the world’s largest crypto exchange, had a big bad reputation: DoJ investigation finds no evidence of its violation of the CFTC/SEC
For the past five years, the US Department of Justice has reportedly been investigating Binance, the world’s largest crypto exchange, for suspected money laundering, unlicensed money transmission, and criminal sanctions violations. According to a report, the DOJ is willing to settle for $4 billion.
The company also faces two civil lawsuits in the US, brought by the Commodities and Futures Trading Commission (CFTC) and Securities and Exchange Commission (SEC), alleging, among other things, commingling of customer assets, anti-money-laundering violations, and artificially inflating trading volumes.
In the last year, Zhao had taken to responding to negative headlines on X, formerly Twitter, by posting “4”—a symbol he adopted to dismiss allegations made against the company as baseless FUD (shorthand for fear, uncertainty and doubt). The DOJ investigation into Binance was a matter of public knowledge, and staff have been waiting on the charges to be dropped.
The new chief executive is different from the previous one. Replacing Zhao is Richard Teng, a former regulator who has little public profile. When he was appointed to head of the regional markets at Binance, there was a rumour that he would become a successor to Zhao, though he refused to speak on the topic in an interview. He was once head of Asia, Europe, and MENA at the exchange.
Garland reported Tuesday that the company had agreed to pay a massive fine after pleading guilty to a felony money-laundering charge. Zhao has also stepped down from his role running the company.
The charging documents describe a company that allegedly turned a blind eye, sometimes willfully and knowingly, prosecutors claim, to the trading of funds from sanctioned countries and regions like Iran, Cuba, Syria, and the Russian-occupied areas of Ukraine such as Crimea and Donbas, as well as the now-defunct criminal dark web market Hydra.
It’s possible that he was the last of his breed. In the aftermath of the collapse ofCRYPTO markets in May 22, 2002, many of the industry’s figures have either been charged with or convicted of felonies. In February, the US government brought charges against Do Kwon, creator of the Terra-Luna stablecoin whose collapse in spring 2022 tipped the first fateful domino in the industry. The DOJ charged Alex Mashinsky, the founder of Celsius, with scheming a scheme to defraud customers. Earlier this month, Sam Bankman-Fried, leader of crypto exchange FTX and archrival to Zhao, was found guilty of overseeing a multibillion-dollar fraud.
