The U.S. Department of Justice is currently in discussions with crypto exchange Binance Holdings Ltd. BNB/USD over a potential resolution to an extensive investigation.
What Happened: The allegations against Binance include money laundering, bank fraud, and sanctions violations.
According to Bloomberg, Binance could wind up paying over $4 billion in penalties.
At the heart of the negotiations is the possibility that Binance founder Changpeng Zhao might face criminal charges in the U.S.
Zhao is currently residing in the United Arab Emirates, a nation without an extradition treaty with the U.S.
Benzinga has reached out to Binance and Zhao for comments.
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Why It Matters: This is one of the most significant criminal cryptocurrency cases to date.
The proposed resolution aims to strike a delicate balance, allowing Binance to continue its operations and avoid market destabilization.
Binance, for its part, is reportedly seeking to minimize its exposure, potentially through a deferred prosecution agreement. Such an agreement would involve the Justice Department filing a criminal complaint but refraining from prosecution, provided Binance adheres to certain conditions, including a substantial penalty and a detailed statement of wrongdoing.
The investigation also encompasses possible sanctions violations, with Binance under scrutiny for allegedly facilitating the evasion of U.S. sanctions against Iran and Russia and potentially aiding transactions that financed Hamas.
This case marks a pivotal moment for the Justice Department in its scrutiny of cryptocurrency companies.
It follows the recent collapse of the crypto exchange FTX FTT/USD and the conviction of its founder, Sam Bankman-Fried, on fraud and conspiracy charges.
Binance has also been embroiled in legal challenges from other U.S. agencies and increased scrutiny from lawmakers. In June, the Securities and Exchange Commission (SEC) filed a lawsuit against Binance and Zhao, leading to significant operational challenges for Binance’s U.S. unit.
The Commodity Futures Trading Commission (CFTC) has also alleged that Binance and Zhao have consistently violated U.S. derivatives rules.
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