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Mahesh

27/11/23 07:08 AM IST

Binance’s $4 billion fine

In News
  • The U.S. government recently slammed Binance, the world’s largest cryptocurrency exchange, with a $4 billion fine after confirming serious protocol failures as it frequently violated U.S. sanctions.
Why was Binance Fined?
  • Binance was charged with not maintaining a working anti-money laundering programme, as well as running an unlicensed money transmitting business, and violating the International Emergency Economic Powers Act.
  • The exchange did not report suspicious transactions and it told employees to keep information from law enforcement bodies.
  • That meant millions of dollars in crypto transactions involving criminal actors like the Russia-based dark net marketplace Hydra and users based in sanctioned nations such as Iran were not reported, “allowing illicit actors to transact freely, supporting activities from child sexual abuse, to illegal narcotics, to terrorism, across more than 100,000 transactions.”
  • Binance processed these transactions, but it never filed a single suspicious activity report.
  • And it also allowed over 1.5 million virtual currency trades that violated U.S. sanctions.
  • The Treasury’s Financial Crimes Enforcement Network settlement agreement assessed a $3.4 billion penalty while the Office of Foreign Assets Control assessed a penalty of around $1 billion, bringing the total to above $4 billion.
  • This marked the “largest enforcement action” in the Treasury’s history.
Effect on Crypto investors
  • BNB, the cryptocurrency that helps facilitate trades on the Binance exchange and is native to the BNB blockchain ecosystem, fell by more than 10% to a price of around $234.
  • Binance has faced legal and compliance issues in a number of countries, but swiftly moved past most barriers .
  • In June this year, the U.S. Securities and Exchange Commission (SEC) hit Binance with a lawsuit, claiming that it was comingling and diverting customer assets to a third party linked with Zhao, and that the exchange broke federal securities laws by “illegally conducting unregistered offers and sales of securities to U.S. investors.”
Source- The Hindu

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