Binance seeks plea deal to avoid US AML charges

abdelaziz Fathi

Binance, the world’s biggest cryptocurrency exchange, is under investigation by the Justice Department, but a split between federal prosecutors is delaying filing criminal charges against the exchange and its CEO.

According to a recent Reuters report, some regulators prefer to take time to review more evidence focused on Binance’s compliance with US anti-money laundering laws and sanctions. However, two sources familiar with the matter added that at least half dozen federal prosecutors involved in the case believe the evidence already gathered justifies moving aggressively against the exchange. As such, they are considering filing criminal charges against individual executives including CEO and founder Changpeng “CZ” Zhao.

While the Justice Department probes potential criminal violations, the report also revealed specifics of what the agencies are involved in the scrutiny. The officials include prosecutors who probe complex cases targeting financial firms, namely the Money Laundering and Asset Recovery Section, known as MLARS, the U.S. Attorney’s Office for the Western District of Washington in Seattle and the National Cryptocurrency Enforcement Team.

The original investigation dates back to 2018 when Binance was asked to voluntarily hand over messages from Zhao and 12 other executives and partners on matters including the exchange’s detection of illegal transactions and recruitment of U.S. customers.

The CFTC has also been investigating Binance over whether it permitted Americans to make illegal trades and let investors buy derivatives that are linked to digital tokens. Americans are barred from purchasing such products unless the platform offering them is registered with the derivatives watchdog.

As part of the inquiry, officials who probe money laundering and tax offenses have sought information from individuals with insight into Binance’s business.

Binance was quick to interject with their side of the story. In a statement shared on Twitter, Binance explicitly named the article saying that “Reuters has it wrong again,” and that “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.”

U.S. officials have expressed concerns that Binance’s activity conceals unlicensed money transmission, money laundering conspiracy, criminal sanctions violations, and that Americans who’ve made profits on the platform are evading taxes.

Per Reuters, Binance’s defense attorneys at U.S. law firm Gibson Dunn have held meetings with Justice Department officials and discussed potential plea deals. Among other things, they argued that a criminal prosecution would wreak havoc on a crypto market already in a prolonged downturn.

In 2020, US regulators filed similar charges against the founders of rival exchange BitMex, accusing them of violating the Bank Secrecy Act, evading money laundering regulations and operating an unlicensed business. The Seychelles-based exchange paid $100 million in a settlement with the US authorities over allegations it broke CFTC and FinCEN rules by allowing Americans to trade on the platform.

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