Binance, the world’s largest digital asset ecosystem, is paving the way to resolve issues around its business in the US with the country’s regulators.
Binance chief strategy officer Patrick Hillmann told the WSJ that the exchange expects to pay monetary penalties to settle a long-running criminal investigation by the US regulators and law-enforcement agencies.
“The company is working with regulators to figure out what are the remediations we have to go through now to make amends for that. The outcome will be likely a fine, could be more.…We just don’t know. That is for regulators to decide,” he said in an interview.
In an apparent confession of breaking laws, Hillmann said their business has been led by software engineers that were “unfamiliar with laws and rules written to address the risk of bribery and corruption, money laundering, and economic sanctions.” He added that Binance has been working to fill gaps in its early compliance efforts, but still anticipates regulators will impose fines for past conduct.
Binance has been reportedly 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, 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’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.