Cryptocurrency exchange Binance has agreed to pay USD 4 billion to settle an investigation from the US Department of Justice. The investigation focused on violations related to the Bank Secrecy Act, failure to register as a money transmitting business, and the International Emergency Economic Powers Act.

Changpeng Zhao, Binance's founder and CEO, also pleaded guilty to failing to maintain an effective anti-money laundering programme and has resigned from his position. The guilty plea is part of coordinated resolutions with the Department of the Treasury's Financial Crimes Enforcement Network (FinCEN), Office of Foreign Assets Control (OFAC), and the US Commodity Futures Trading Commission (CFTC). Attorney General Merrick B.

Garland emphasised that Binance's status as the world's largest cryptocurrency exchange does not exempt it from legal consequences, citing the company's significant corporate penalty. Treasury Secretary Janet L. Yellen underscored the importance of financial institutions adhering to regulations to ensure the safety of the financial system.

Officials also issued a stern warning to cryptocurrency and decentralised finance companies, emphasising the obligation to comply with US law when serving US customers. The investigation revealed that Binance prioritised growth and profits over compliance with US law since its launch in 2017. Despite announcing measures to block US customers in 2019 and launching a separate US exchange, the company retained a substantial number of US customers, particularly high-value 'VIP' customers.

Failing to implement AML measures According to the US DoJ, Binance failed to implement essential components of an effective anti-money laundering programme, including comprehensive know-your-customer protocols and systematic transaction monitoring. It's also been brought up that the company allowed users to trade without submitting identifying information, only implementing KYC requirements in August 2021. Additionally, Binance was accused of not implementing controls to prevent US users from trading with customers in sanctioned jurisdictions, leading to over USD 898 million in trades between US users and individuals in Iran.

As part of the plea agreement, Binance will forfeit USD 2,510,650,588 and pay a criminal fine of USD 1,805,475,575, totaling USD 4,316,126,163. The company will also undergo three years of monitoring to enhance its anti-money laundering and sanctions compliance programmes. Binance cooperated with the investigators While Binance did not make a timely voluntary disclosure of wrongdoing, it received partial credit for cooperation in the investigation.

However, the company did not receive full credit due to delays in producing relevant evidence. Changpeng Zhao admitted understanding Binance's obligation to register with FinCEN and implement an effective anti-money laundering programme. The DoJ believes that Zhao's decision-making and disregard for an effective AML programme were key factors in the illegal transactions conducted on Binance's platform.

At the time of writing, the case is being investigated by the IRS Criminal Investigation and prosecuted by various units within the Department of Justice. .