Billion-dollar fine for Binance shows: authorities are regaining ground in the crypto world

The CEO of the largest crypto exchange in the world has reached a settlement with the US Department of Justice, which has been pursuing him for two years. Changpeng Zhao, founder of Binance, has faced several charges and his company has faced increasing restrictions on the US market.

The Binance chairman pleaded guilty in Seattle court on Tuesday to violating anti-money laundering and sanctions regulations with his company. He must pay a fine of more than 45 million euros and is not allowed to interfere with the management of the company for several years. Binance will also receive a fine of 3.94 billion euros.

In a statement on X, Changpeng Zhao wrote: “I made mistakes, I have to take responsibility for them.”

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<strong>Sam Bankman-Fried</strong>learned from his parents that he should pursue a way of life with maximum benefit to society.” class=”dmt-article-suggestion__image” src=”https://images.nrc.nl/2dj4bQUfQnPPt5lT8r06JcCNN-4=/160×96/smart/filters:no_upscale()/s3/static.nrc.nl/bvhw/files/2023/09/data105851761-1c5e9e.jpg”/></p><p>With the settlement, Zhao prevents a fate like that of the CEO of crypto competitor FTX.  Sam Bankman-Fried was found guilty of a series of charges at the end of October.  The sentence has not yet been announced, but Bankman-Fried could get life in prison.  In his statement, Zhao emphasizes the difference with FTX.  The American regulators do not accuse Binance of embezzlement of customer funds and market manipulation, he writes.</p><p>The charges against Zhao and Binance mainly revolved around facilitating transactions with organizations such as Islamic State, Hamas and Al-Qaeda.  According to US Treasury Secretary Janet Yellen, “Binance turned a blind eye to legal obligations in the pursuit of profit, allowing money to flow to terrorists, cybercriminals and child molesters.”</p><h2 class=Elusive company

Binance was founded in 2017 and quickly grew into the largest crypto exchange in the world, also in the Netherlands. About half of crypto transactions worldwide go through Binance. The company has been fairly elusive until now; it is not listed on the stock exchange, has no head office anywhere and lacks independently verified annual figures. It is clear that it earns billions and can easily pay the American fine.

Because crypto trading is global and knows no national borders, national authorities have little control over it, which offers criminals opportunities. The legislation and regulations are also limited and consumer protection is lacking. Particularly in the US, it was unclear for a long time which rules crypto companies had to comply with and which regulator they fall under. Companies are constantly pushing the boundaries.

Attorney General Merrick Garland, who announced the settlement: “Binance became the largest cryptocurrency exchange in the world in part because of the crimes it committed – now it is paying one of the largest corporate fines in United States history.”

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<strong>Changpeng Zhao</strong> poses for photographers, shortly after a television interview with Bloomberg in Tokyo.” class=”dmt-article-suggestion__image” src=”https://images.nrc.nl/lymBvgBG5tYGV6SRKwN3Jq_ddXc=/160×96/smart/filters:no_upscale()/s3/static.nrc.nl/images/gn4/stripped/data93312774-5dbfa4.jpg”/></p><h2 class=Crypto rules

Authorities are gradually regaining ground in the crypto world and the lawlessness is ending. Jurisdictions such as Hong Kong and Dubai have clear crypto regulations, which is why more and more companies are establishing themselves there. A first crypto law has been passed in the EU, which will come into effect at the end of 2024. The US is also working on legislation.

Binance’s settlement shows that the company does not oppose regulations and wants to be one of the largest players even in a more regulated world. The agreement with the authorities allows the company to resume its daily activities, which has been difficult recently. Several banks severed their ties with the American branch of Binance, meaning that customers of the platform could no longer exchange cryptocurrencies such as bitcoin for dollars.

Earlier this year, Binance stopped trying to register with De Nederlandsche Bank in the Netherlands. The regulator fined the company 3.3 million euros last year because it was active on the Dutch market without mandatory registration.

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