{"id":364061,"date":"2022-12-12T22:32:58","date_gmt":"2022-12-13T03:32:58","guid":{"rendered":"https:\/\/insidebitcoins.com\/?p=364061"},"modified":"2022-12-12T22:32:58","modified_gmt":"2022-12-13T03:32:58","slug":"u-s-justice-department-undecided-about-charging-binance-as-the-crypto-market-struggles","status":"publish","type":"post","link":"https:\/\/insidebitcoins.com\/news\/u-s-justice-department-undecided-about-charging-binance-as-the-crypto-market-struggles","title":{"rendered":"U.S. Justice Department undecided about charging Binance as the crypto market struggles"},"content":{"rendered":"

Splits among US Department of Justice prosecutors are delaying the resolution of a protracted criminal investigation into Binance<\/a>, the largest cryptocurrency exchange in the world, according to four people with knowledge of the situation.<\/p>\n

According to these people, the investigation was launched in 2018 and is concentrated on Binance’s compliance with American anti-money laundering laws and sanctions. As per two of the sources, some of the at least six federal prosecutors working the case feel that the evidence already gathered supports taking aggressive action against the exchange and charging specific executives, including the founder Changpeng Zhao<\/a>, with crimes. The sources claimed that some have argued for taking the time to consider more evidence.<\/p>\n

The Money Laundering and Asset Recovery Section, also known as MLARS, the U.S. Attorney’s Office for the Western District of Washington in Seattle, and the National Cryptocurrency Enforcement Team are all involved in the investigation. According to Justice Department regulations, the MLARS chief must give his or her approval before filing money laundering charges against a financial institution. Any action against Binance would probably require approval from senior DOJ officials as well as leaders from the other two offices, according to three sources.<\/p>\n

Reuters has put together the most thorough account of the investigation’s development and Binance’s efforts to thwart it so far through interviews with nearly a dozen people with knowledge of the case, including current and former U.S. law enforcement officials and ex-Binance advisors. The decision by the prosecution to charge Binance has not previously been disclosed.<\/p>\n

The severely troubled cryptocurrency industry is playing with fire. Binance’s hold on the market might be lessened if Zhao and Binance are found to be guilty. Because of the most recent failure of rival exchange FTX<\/a>, its grip has grown stronger.<\/p>\n

Focus of the investigation<\/h2>\n

According to the four people, the defense lawyers for Binance at the American law firm Gibson Dunn have recently met with representatives from the Justice Department. One of Binance’s defenses is that a criminal prosecution would devastate the crypto market, which is already experiencing a protracted downturn. According to three of the sources, potential plea bargains were discussed.<\/p>\n

A spokesperson for Binance said:<\/p>\n

We don’t have any insight into the inner workings of the US Justice Department, nor would it be appropriate for us to comment if we did,<\/p><\/blockquote>\n

Justice Department officials opted not to comment.<\/p>\n

Unlicensed money transmission, a money laundering conspiracy, and criminal sanctions violations are the alleged offenses that are under investigation. According to a source with knowledge of the situation, no charges have been officially decided upon, but Zhao and a few other executives are believed to be the focus of the investigation by the government. In the end, the Justice Department may decide to charge Binance and its executives, work out a resolution, or simply close the case without taking any further action.<\/p>\n

About the case, not much has been made public.<\/p>\n

According to a previous report from Reuters, prosecutors asked Binance for extensive internal records about its anti-money laundering checks as well as communications involving Zhao and other executives in 2020.<\/p>\n

A hiring frenzy<\/h2>\n

The latest information reveals that the case has followed Binance for the majority of its five years of existence, influencing Zhao’s management of the business as he spearheaded its meteoric global expansion. Last year, he started a hiring frenzy that resulted in the hiring of representatives from the American government agency that was looking into Binance, the Internal Revenue Service’s Criminal Investigation division. According to company messages that Reuters has previously reported, he imposed strict secrecy rules on employees, ordering them to use email as little as possible and to communicate using encrypted messaging services.<\/p>\n

Over the course of 2022, Reuters looked into Binance’s compliance with financial crime laws. According to the reporting, Binance maintained lax anti-money laundering controls, processed more than $10 billion in payments for criminals and businesses trying to circumvent U.S. sanctions, and planned to get around regulators both domestically and abroad.<\/p>\n

Binance has disputed the articles, calling the descriptions of its compliance controls “outdated” and the calculations for illicit funds “inaccurate.” In addition to “further improving our ability to detect illegal crypto activity on our platform,” the exchange has stated that it is “driving higher industry standards.”<\/p>\n

Binance, which Zhao founded in Shanghai in 2017, now rules the cryptocurrency market. In October, the exchange processed trades totaling about $1.6 trillion, or about half of the total trading volume in the cryptocurrency market. According to data website CryptoCompare, that amount dwarfed its former rival FTX, which handled $230 billion in trades that month.<\/p>\n

Early in November, FTX collapsed<\/a>, sparking a surge of public calls for more regulation of the cryptocurrency sector. Sam Bankman-Fried, the exchange’s founder, had bragged that it was the “most regulated,” but he had established it in the Bahamas, where regulation was lax, and had secretly used customer deposits. According to Reuters, the Justice Department has launched an investigation into FTX’s use of corporate funds. Attorneys for FTX claimed during a bankruptcy hearing that Bankman-Fried operated the exchange as a “personal fiefdom.” According to Bankman-Fried, he didn’t intentionally do anything wrong.<\/p>\n

It is still unclear, according to sources familiar with Justice Department operations, whether this new investigation will speed up or slow down the one into Binance.<\/p>\n

By announcing that Binance would sell its holding of FTX’s digital token, Zhao\u2014who will not reveal the location or organization behind his own exchange\u2014accelerated his rival’s decline. This led to a spike in user withdrawals, which ultimately compelled FTX to declare bankruptcy.<\/p>\n

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As part of Binance\u2019s exit from FTX equity last year, Binance received roughly $2.1 billion USD equivalent in cash (BUSD and FTT). Due to recent revelations that have came to light, we have decided to liquidate any remaining FTT on our books. 1\/4<\/p>\n

— CZ \ud83d\udd36 BNB (@cz_binance) November 6, 2022<\/a><\/p><\/blockquote>\n