In a major development for the cryptocurrency industry, Binance, the largest exchange platform in the world, and its CEO Changpeng Zhao have entered into an agreement with American authorities. As a result of this agreement, Binance has agreed to plead guilty to violations of US anti-money laundering laws while also paying two fines totaling several billion dollars to the US Treasury.
The American investigation into Binance began in 2018, leading to legal action by two main financial market regulatory agencies, the SEC and the CFTC. Despite attempts by Binance to distance itself from American customers in 2019, it was found that some American customers were still being retained on the platform. As part of their agreement with American authorities, Binance has committed to using an external observer for compliance purposes for a period of three years.
The violations by Binance include a failure to implement anti-money laundering measures, which allowed criminal actors to conduct trades on the platform. The actions taken by Binance highlight the challenges posed by digital currencies, which can be used by criminal organizations and offer certain anonymity and less robust money laundering safeguards than traditional financial systems.
Changpeng Zhao may retain his stake in Binance but will face sentencing at a later date. The company has also committed to complying with existing regulations for a period of three years. This news is likely to have significant implications for other cryptocurrency exchanges and their compliance practices as they navigate similar regulatory challenges.