Following a plea deal struck last November, a US federal court judge has signed off on Binance's USD$4.3 billion settlement with the US Department of Justice, the Department of Treasury and the Commodity Futures Trading Commission.
Binance, the world's largest cryptocurrency exchange, has agreed to one of the largest corporate penalties in US history to settle allegations of money laundering, conspiracy to conduct an unlicensed money transmitting business, and sanctions violations.
Binance’s founder and chief executive officer Changpeng Zhao (commonly known as “CZ”) plead guilty to failing to maintain an effective anti-money laundering program. Late last year, he also resigned as CEO of Binance and is currently awaiting sentencing.
The Court approval resolves a number of aspects of a long running investigation into Binance’s operations by US authorities, although claims brought by the SEC over alleged securities law violations continue to be litigated.
The plea deal followed a coordinated investigation by the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) and Office of Foreign Assets Control (OFAC), as well as the US Commodity Futures Trading Commission (CFTC). The funds will be distributed amongst these agencies, with a significant portion allocated to the Treasury for sanctions violations.
Attorney General Garland emphasised the significance of the deal, drawing reference to the recent criminal conviction of Sam Bankman-Fried, ex-CEO and founder of FTX:
Binance became the world’s largest cryptocurrency exchange in part because of the crimes it committed – now it is paying one of the largest corporate penalties in U.S. history. In just the past month, the Justice Department has successfully prosecuted the CEOs of two of the world’s largest cryptocurrency exchanges in two separate criminal cases.
As part of the plea deal, Binance has agreed to accept an independent monitorship, which has not yet been signed off by the judge. Sullivan & Cromwell, the law firm which acted for FTX debtors in their Chapter 11 insolvency proceeding, is reportedly poised for this role.
The US action against Binance is perhaps of the most significant salvos in the US authorities' enforcement drive against the crypto industry. This settlement also underlines the United States very broad approach to its jurisdiction, particularly in the area of anti-money laundering and financial sanctions. In this regard, Binance joins a long list of institutions which have felt the brunt of US enforcement action over AML/CTF and sanctions violations.
Written by J Huang and S Pettigrove