Binance, the largest cryptocurrency exchange in the world, announced on Nov. 21 that it reached a settlement with the U.S. government over compliance violations, allowing the exchange to continue operating. The company said that it made mistakes as it grew in an evolving industry, but this settlement marks a new chapter of learning and growth.
Binance has agreed to pay $4.3 billion in penalties and will allow a third-party monitor to have access to its transactions and accounts, according to a DOJ press release.
The settlement resolves the DOJ’s investigation into Binance as well as the charges the company faced from the CFTC, according to a CFTC press release.
After the settlement was announced, the company said in a post on its website that while it is "not perfect," its goal since its launch as a startup has been to protect its users. The post said that although the company has made significant investments in compliance and security, it did not have adequate compliance controls in place in the past. "Binance grew at an extremely fast pace globally, in a new and evolving industry that was in the early stages of regulation, and Binance made misguided decisions along the way," the post said. "Today, Binance takes responsibility for this past chapter."
During the past two years, Binance has upgraded its systems and restructured the company to elevate personnel with backgrounds in compliance and law enforcement, according to the company. As part of that restructuring, Binance said it updated and expanded its in-house anti-money laundering (AML) controls. "Binance’s AML compliance is now an industry standard, and Binance continues to make improvements to its comprehensive AML policies." The company is also among the first crypto exchanges outside of the U.S. to implement mandatory know-your-customer (KYC) protocols for all of its users, through which users are required to submit identification and a photograph. To support sanctions compliance, Binance utilizes KYC and IP blocking, as well as using third-party tools to conduct real-time transaction monitoring.
Binance said in the post that several of its teams are dedicated to assisting law enforcement requests and sharing knowledge with law enforcement agencies around the world. In 2022, Binance led and participated in more than 70 workshops in which Binance personnel shared best practices for countering cyber- and financial crimes. In Sept. 2022, Binance launched its Global Law Enforcement Training Program, which has held 120 workshops during 2023. The company has assisted law enforcement agencies, including in the U.S., with tackling national security-related issues. "Binance is pleased to be one of the most significant global partners for law enforcement in its fight to combat illicit financial activity around the world," the post said.
Binance announced that as part of the settlement, co-founder Changpeng Zhao (CZ) would be replaced in his role as CEO by Richard Teng, the company’s former Global Head of Regional Markets. Binance emphasized that the DOJ has not accused it of misusing any customer funds or engaging in market manipulation.
