Monday, December 4, 2023

Binance, world’s largest crypto exchange, and its CEO face federal charges

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Binance, the world’s largest cryptocurrency exchange platform — where users from across the globe buy and sell electronic forms of money — and its CEO Binance and its CEO, Changpeng Zhao, face federal charges related to money laundering and violating U.S. sanctions. Binance is expected to face billions in fines and fees, according to court documents. 

The platform’s founder and chief executive, Canadian national Changpeng Zhao, has been accused of violating anti-money laundering laws and is expected to step down from Binance’s leadership. 

Binance has been under investigation by numerous regulators and law enforcement agencies, including the Commodities Futures Trading Commission. The company is accused of not taking appropriate steps to prevent money laundering on its platform and operating illegally in the U.S., permitting traders in nations currently sanctioned by the federal government — like Iran — to engage in business deals with Americans.

Federal investigators alleged the cryptocurrency exchange, which processes billions of dollars in trades, illegally profited by allowing darknet actors and ransomware hackers to operate on the platform and did not properly screen for other illicit services.

Between January 2018 and May 2022, prosecutors alleged Binance processed 1.1 million transactions totaling nearly $900 million between Americans and individuals believed to be in Iran. Zhao and company executives were allegedly aware that exchanging American money would require the platform to follow U.S. sanctions laws but also saw users in the U.S. as vital to growth. 

A separate exchange — Binance.US —  was set up for use by American cryptocurrency traders, but investigators alleged Americans remained on the original, unregulated Binance platform, too. 

“The purpose of the conspiracy was to allow Binance to operate as a virtual currency exchange and gain market share and profit as quickly as possible,” according to the criminal information to which the company pleaded guilty. The defendants allegedly encouraged high-value clients to “conceal and obfuscate their U.S. connections,” court documents said. 

This is a developing story.

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