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The United States Department of Justice is seeking over $4 billion from Binance Holdings as it looks for a resolution to a year-long investigation into the exchange and its operations.
Negotiations between Binance and the Justice Department have also thrown up the possibility of Binance founder Changpeng Zhao facing criminal charges.
A Record-Breaking Penalty
The United States Justice Department is reportedly seeking $4 billion from Binance, the world’s largest cryptocurrency exchange by trading volume. The investigation into Binance involves several allegations, including bank fraud, money laundering, and sanction violations. The probe is being led by the Justice Department’s criminal division’s money laundering and asset recovery section and the national security division of the US attorney’s office in Seattle. This makes it one of the most extensive investigations into a crypto company.
As part of the resolution, Binance must pay a penalty of $4 billion, making it one of the largest ever penalties levied on a company. Binance founder Changpeng Zhao also has the potential to face criminal charges under the agreement. The proposed resolution between the two parties looks to find a balance that allows Binance to continue its operations instead of risking a collapse that could majorly impact the crypto space.
Binance Seeks To Minimize Exposure
Binance, on its part, has sought to minimize its exposure by suggesting going for a deferred prosecution agreement. Under this agreement, the Justice Department would file a criminal complaint against Binance. However, prosecution would be suspended if the exchange met specific conditions. This includes paying a substantial penalty and acknowledging wrongdoing. Additionally, a monitoring process would also be established to ensure compliance.
Binance has been under the lens of the Justice Department since at least 2018. In 2020, it was reported last year that federal prosecutors asked the exchange to provide internal records related to its anti-money laundering efforts and communications involving Binance founder Changpeng Zhao. In June, the United States Securities and Exchange Commission sued Binance, accusing the exchange of running an elaborate operation to evade US federal securities laws. Binance denied the accusations, vowing to defend itself vigorously.
The Commodity Futures Trading Commission (CFTC) had also sued Binance in March, accusing the exchange of wilfully evading US commodities laws.
Potential Impact On Crypto
Any resolution between Binance and the Department of Justice is bound to impact investor sentiment towards crypto significantly. This could potentially add further pressure on an ecosystem that is already reeling from the impact of a plethora of investigations and charges against prominent firms and individuals in the space. A number of high-profile collapses also rocked the crypto space over the past year, and it is looking to bounce back after seeing growing interest from traditional financial institutions.
Binance itself has faced several setbacks in its US unit, with Binance US, the company’s US platform, reeling under the weight of several legal challenges and job cuts. The proposed penalties against Binance and potential criminal charges against Changpeng Zhao highlight the growing regulatory scrutiny faced by the crypto industry. The resolution with Binance could also set up a precedent for compliance and accountability within crypto.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.