In a significant development, the US Department of Justice (DOJ) is reportedly pursuing a resolution with Binance, the world’s largest cryptocurrency exchange by trading volume.
According to Bloomberg, negotiations between the two parties include the potential for Binance founder Changpeng Zhao, also known as CZ, to face criminal charges as part of the agreement.
The investigation involves allegations of money laundering, bank fraud, and sanctions violations, and an official announcement is expected by the end of the month.
Binance Faces Record-Breaking Penalty
The probe, led by the US DOJ’s criminal division’s money laundering and asset recovery section, along with the national security division and the US attorney’s office in Seattle, is one of the largest investigations conducted into a cryptocurrency company, according to Bloomberg.
As part of the proposed resolution, Binance would likely be required to pay a penalty exceeding $4 billion, potentially making it one of the largest-ever penalties in a criminal cryptocurrency case.
The proposed resolution aims to strike a balance that allows the exchange to continue its operations rather than risk a collapse that could have adverse consequences for the market and crypto holders.
Binance has reportedly sought to minimize its exposure by advocating for a deferred prosecution agreement. Under such an agreement, the Justice Department would file a criminal complaint against the company.
Still, prosecution would be suspended if Binance meets specified conditions, including paying a substantial penalty and acknowledging its wrongdoing. A monitoring process would be established to ensure compliance.
Regulatory Storm
The investigation into Binance encompasses allegations of aiding in the evasion of US sanctions against Iran and Russia, as well as scrutiny surrounding transactions that may have financed Hamas.
Additionally, Binance has faced legal and regulatory action from other US agencies, including the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).
The SEC filed a lawsuit accusing Binance and CZ of various violations, while the CFTC alleged consistent breaches of US derivatives rules.
The potential resolution of the investigation against Binance follows the recent collapse of FTX, resulting in the conviction of its founder on fraud and conspiracy charges.
While it remains uncertain if other Binance executives besides CZ will face charges, the exchange has already experienced setbacks in its US unit. Binance.US, the company’s US-based platform, has been significantly impacted by legal challenges, job cuts, and the suspension of US dollar deposits.
As the US Justice Department seeks a resolution with Binance, the outcome of this investigation could have profound implications for both the exchange and the broader cryptocurrency industry.
The proposed penalties and potential criminal charges against CZ highlight the increasing regulatory scrutiny faced by major players in the crypto space. The resolution, once finalized, could set precedents for compliance and accountability within the industry.
BNB has remained resilient, maintaining its uptrend despite ongoing regulatory developments and disclosure of potential outcomes. Over the past 24 hours, BNB has gained 4.7%, while over the past 7 days, it has managed to gain 4.5%, resulting in a trading price of $257.8.
Featured image from Shutterstock, chart from TradingView.com