The reversal by Binance comes after months of back-and-forth between the exchange and U.S. regulators, who have been probing its practices. In a blog post published early Monday, Binance co-founder Changpeng Zhao dismissed reports of any investigations and mocked media outlets that reported otherwise as “fake news.”
However, less than 24 hours later, Zhao said in a statement to Reuters that Binance was planning to pay monetary penalties to settle probes into its business in the United States. The decision could mark a major about-face for the exchange, which previously denied any investigation into its practices.
Hillmann’s admission suggests that Binance may have violated anti-bribery and corruption laws in countries where it does business. If confirmed, this could lead to serious consequences for the cryptocurrency exchange – including potential fines and sanctions from government regulators.
The CEO of Binance, Changpeng Zhao, said that the company is working with regulators to figure out what are the remediations they have to go through now due to their recent crypto security breach. The outcome could range from a “fine” to more serious consequences. This news shows just how seriously regulators are taking the issue of cryptocurrency security.
It was not said what the lapses were, but they could have involved Binance failing to report suspicious activity or violating sanctions. In December, Reuters reported that prosecutors at the U.S. Department of Justice have been investigating Binance since 2018 over any lapses in compliance with U.S. anti-money laundering laws and sanctions, and has been split about whether it is the right time to conclude the probe. While some within DOJ may want to press forward with a case against Binance and potentially levy significant penalties, others may argue that concluding the investigation prematurely could damage relations between the United States and one of its largest financial institutions openings up future breaches by blockchain companies operating in America
Reuters is often highly critical of Binance, and the exchange has publicly disputed many of its reports in the past. In this most recent case, Reuters alleges that Binance was illegally trading on behalf of a pro-QAnon account. Binance has strongly denied these allegations, stating that its law enforcement team is one of their proudest achievements.
After Binance founder and CEO Changpeng Zhao aired his grievances against the founder of FTX, Sam Bankman-Fried, many journalists took to Twitter to ask what evidence existed to substantiate Zhao’s claims. Stories discussing Zhao’s accusations typically mention little more than an unspecified Twitter account with a vague accusation of collusion, which does not offer much substance for readers beyond the online fomentation it intends to create.
Binance has apparently decided that it needs to take a different tack in order to avoid regulatory trouble. This change of course comes as it becomes publicly apparent that things are not all okay for the firm. The SEC has told Paxos, which issues BUSD stablecoin for Binance, that it plans to take action against the firm over such issuance. As a result, Binance is likely looking for other ways to make money and may be looking into launching its own stablecoin.
Paxos has halted the issuance of new BUSD tokens, as part of an effortcompliance with New York Department of Financial Services regulations. The company maintains that it will continue to honor existing BUSD tokens, pending further clarity from DFS.
