US Senators Allege Binance for becoming a ‘hotbed’ of illegal activity

Updated: 03 March 2023

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In the latest turn of events for Binance, Bipartisan US Senators are demanding action on Binance.

The Senators from both sides of the aisle are demanding the world’s largest crypto exchange to open up their books and provide a detailed account of their finances to maintain their regulatory compliance.

These sets of questions by the US Senators come amidst an investigation by media reports by agencies like Reuters and others. The three Senators released a letter on Wednesday citing their concerns.

Here’s all to know about the ongoing tussle between the Senators and the crypto exchange.

Bipartisan US Senators Showcase Their Concern

The letter pertaining to the activities taking place at Binance has been signed by three Senators, including Elizabeth Warren, Chris Van Hollen, and Roger Marshall.

The letter dated 1st March 2023 mentions, “…little information about Binance’s finances available to the public suggests that the exchange is a hotbed of illegal financial activity that has facilitated over US$10 billion (S$13.5 billion) in payments to criminals and sanctions evaders”.

The letter in question is addressed to Brian Shroder, the Binance.US president and Binance Chief Executive Zhao Chengpeng.

This questioning comes amidst a recent court filing concerning Binance.US pertaining to the acquisition of the bankrupt crypto broker Voyager Digital. Voyager had filed for bankruptcy in July last year, months after the crash of Luna and TerraUSD.

Binance and Binance.US have the same majority owner- Mr. Zhao, according to the details laid out in the filings as in the Texas courts. Binance, as an entity, had secret access to a global bank account belonging to the US exchange, as per the Reuters report.

The Senators’ letter further mentioned “investigations into criminal sanctions evasion, money laundering conspiracy, unlicensed money transmission, questions about its financial health, and increased scrutiny over its intentionally ‘opaque corporate structure’”.

However, along with Binance, their partners are also involved in the suit as well. In January this year, Binance was also a counterplay to Bitzlato, which was a digital asset platform accused of illegally processing millions of dollars of funds.

Binance USD (BUSD) Records Less Than $10 billion market cap

After the statements made by the Senators, Binance USD (BUSD) market cap has dropped below the $10 billion mark for the first time in the last two years. What’s more surprising is the fact that this wasn’t the case with Binance, even during the FTX crash of 2022.

It is being said that investors pulled out more than $6 billion

According to a report, there are rumors that the United States took a regulatory action on the token issuer and further arranged a delisting of the token from a major crypto exchange.

As per a report in Cointelegraph, the BUSD market capitalization fell to $9.66 billion. This comes amidst reports that Binance USD was pulled into a potential lawsuit against Paxos by the Securities and Exchange Commission (SEC), for allegedly hampering investor protection laws.

Furthermore, Coinbase announced that the stablecoin BUSD would be delisted from its platform on March 13th, 2023, over the crypto not complying with their listing policies.

Binance Takes Steps To Address The Issues

The Chief Strategy Officer at Binance, Patrick Hillmann, stated in an interview that the exchange had some compliance “gaps” in the past, but they addressed them. He also stated that the company was in a settlement discussion with US regulators but could not provide a fixed amount for settlement.

They also went ahead to hire a new chief compliance officer in January this year- Mr. Noah Perlman, who comes from Gemini Trust.

A representative from Binance stated, “Unfortunately, a lot of misinformation has been spread about our company and we look forward to correcting the record,”.

“As a globally regulated exchange, we receive queries from officials in jurisdictions in which we operate on a regular basis and we always respond in an attempt to both explain our business operations and cooperate with our regulators., the statement further stated.

“Binance.com does not operate in the US, nor do we have US-based customers. However, we appreciate the senators’ request and will provide information to help them better understand why we remain the most trusted platform with users across the globe.”

Conclusion: What’s Ahead for Binance?

Binance has been at the forefront of revolutionizing the crypto ecosystem since its inception. It has played a vital role in the crypto industry since it has come into play.

They have been developing new tools and technologies in the fields of NFT and more. Their recent developments include Bicasso, which is an AI-based NFT generator.

Apart from that, Binance’s payment unit Ceffu mentioned that it is planning to apply for a permit to offer payment services in Singapore in another attempt to penetrate into the crypto-friendly market.

The exchange is, in fact, too large not to impact the entire crypto market. Hence, it is only expected by regulators as well as the organization coordinate and work together in such a situation for an amicable solution.

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