The United States (US) government has reportedly secured a settlement with Binance, the world's largest cryptocurrency exchange, amounting to over $4 billion, according to an anonymous source cited by the Associated Press.
The settlement comes after months of accusations against Binance, including operating as an unregistered securities exchange and violating various US securities laws.
SAN ANSELMO, CALIFORNIA - JUNE 06: In this photo illustration, the Binance logo is displayed on a screen on June 06, 2023 in San Anselmo, California. The Securities And Exchange Commission has filed lawsuits against cryptocurrency exchanges Coinbase and Binance for allegedly violating multiple securities laws.
Binance Under Legal Scrutiny
Binance, a Cayman Islands limited liability company founded by CEO Changpeng Zhao, has been at the center of legal scrutiny, facing allegations similar to those discovered following the collapse of the second-largest cryptocurrency exchange, FTX, in 2022.
The charges involve accusations of operating as an unregistered securities exchange and violating US securities laws. Changpeng Zhao, the CEO of Binance, has been accused of redirecting customer funds, hiding the mingling of billions of dollars in investor assets, and allegedly channeling them to a third party personally owned by Zhao.
In response to the US Securities and Exchange Commission (SEC) filing a lawsuit against Binance, the company asserted its collaboration with the investigation but criticized the SEC for acting independently and opting for legal action.
Nearing a Resolution?
It was reported on November 20 that the ongoing investigation led by the US Department of Justice (DOJ) into Binance is nearing a resolution with a substantial settlement of $4 billion.
This development is seen as a potential conclusion to the extended probe against Binance and its CEO, Changpeng Zhao, who has been the subject of alleged criminal charges. Negotiations surrounding the settlement indicate that Binance's US operations will continue, sparing the cryptocurrency exchange platform from a severe blow.
According to Bloomberg, sources familiar with the matter noted that the DOJ sought a settlement of up to $4 billion, addressing potential criminal charges in the US against Zhao. The focus of the lawsuit reportedly revolves around Binance's violations related to money laundering, bank fraud, and sanctions.
Despite Zhao's current residence in the United Arab Emirates, where there are no extradition treaties with the US, he remains liable to criminal charges if he enters the US.
While the $4 billion settlement represents a significant financial setback for Binance, it allows the platform to continue its operations in the US, avoiding potential market fallout and safeguarding its customer base. The settlement is viewed as a measure to prevent a collapse similar to previous incidents in the cryptocurrency exchange industry.
It is worth noting that the cryptocurrency sector has been contending with controversies and upheavals, as demonstrated by the recent conviction of Sam Bankman-Fried, the 31-year-old founder of the unsuccessful cryptocurrency brokerage FTX. He was found guilty of fraud involving the misappropriation of a minimum of $10 billion from both customers and investors.
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