The US Seeks Over $4 Billion From Binance in Cryptocurrency Case Settlement

November 21, 2023

The US Department of Justice is planning to secure over $4 Billion from Binance Holdings Ltd as a part of a potential settlement to conclude its year-long investigation into the world’s biggest cryptocurrency platform.

Talks between the Justice Department and Binance, a cryptocurrency exchange platform, may result in founder Changpeng Zhao facing charges in the US as a part of the resolution to address allegations of money laundering, bank fraud, and sanctions violation, reported Bloomberg.

Following the media report on the negotiations, the BNB cryptocurrency which is native to Binance and BNB blockchain witnessed an 8.5% increase in exchange reaching $266.42.

The exact format and timing of the proposed resolution, along with the nature of the charges, remain unclear. However, Binance may likely be charged with more than $4 billion, making it one of the largest penalties ever seen in cryptocurrency investigation.

The criminal’s division of money laundering and asset recovery section is directing the investigation in cooperation with the national security division and the US attorney’s office situated in Seattle.

Binance and DOJ Deferred-Prosecution Agreement

It was revealed that the agreement aims to establish a balance that permits Binance to continue its activities rather than facing the potential of a failure leading to adverse consequences for both market and crypto investors.

In a case where Binance and the Department of Justice enter into a deferred-prosecution agreement, DOJ would initiate a complaint against the company, however, the legal proceedings would be suspended if Binance agrees to show compliance with specific requirements including financial penalty, acceptance of involvement in wrongdoing, and development of compliance monitoring system.

Binance under scrutiny for years

Various US government authorities have taken legal and regulatory steps against Binance, while US lawmakers have also increased their scrutiny.

Binance has been under scrutiny by the Justice Department since 2018 and in December 2022, the Federal Prosecutors formally requested the company to provide internal documents concerning anti-money laundering regulations, as well as exchanges involving Changpeng Zhao.

In June, a lawsuit was filed by the Securities and Exchange Commission (SEC) against Binance and Zhao, accusing them of operating an  “elaborate scheme to evade U.S. federal securities laws.” However, Binance completely denied the allegations made by the SEC and reportedly noted that it would “vigorously defend” its platform.

The lawsuit severely impacted the American Branch of Binance leading to Brian Shroder, head of the Binance US branch’s exit from the company in September. This also led to the downsizing of the company with the elimination of 100 employees constituting one-third of their workforce.

Additionally, the trading volume on Binance US witnessed an extremely low level following the loss of banking support and suspension of US dollar deposits.

Cryptocurrency scams have become increasingly prevalent, exploiting the decentralized nature of the digital market. Different sectors including financial institutions, government authorities, and blockchain technology developers are taking strict measures to protect crypto investors and prevent crypto-related scams.
Also Read: Binance Expands Crypto Operations in South-East Asia

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To get more information on what is CVC mixing and how does it work, also read: Convertible Virtual Currency (CVC) Mixing & Money Laundering