Good day everyone,
I hope you are all well and had an excellent week, welcome to CryptoGod-1’s blog on all things crypto. In this post I will be looking at the recent news, which emerged in Bloomberg, that Binance are considering settling their case with to Department of Justice for a whopping $4 Billion.
Binance to Pay $4 Billion to End Investigation
A report in Bloomberg on Monday the 20th of November 2023 has not that the legal issues being levied at cryptocurrency exchange Binance from the DOJ may soon be wound up. This comes after it emerged that both parties are working on a $4 billion settlement deal which could see the department’s investigation into the company ended within the next month. This will of course be contingent on the exchange meeting certain conditions, but the news has been a welcome sight for the exchanges users given the uncertainty which has surrounded Binance since the years-long investigation began.
According to those close to the deal, Binance would be allowed to continue its operations in the United States as long as they adhere to the laws, and on top of that the exchange will pay $4 billion in fines. Added to this is the news that the exchange will be required to publish a report admitting which U.S laws have been broken in the past, along with complying with a monitoring team to ensure compliance in the future. They will also be required to revamp compliance practices across the board and ensure that any other recommended conditions are met.
Assuming Binance agrees to these conditions, the DOJ will make a criminal complaint but will not prosecute the exchange. This resolution would seek to find a suitable balance which would allow Binance to continue operating instead of risking a collapse that could end up at a similar level to that of FTX in November 2022, which in turn could cause negative fallout for markets and crypto holders.
The exchange is looking to minimize its exposure in any settlement which is why they are pushing for a deferred prosecution agreement. Basically this means that the DOJ would not go ahead with a prosecution as long as the company meets its prescribed conditions. Included in this would be the substantial financial penalty mentioned above.
The DOJ had also been investigating Binance for allegedly breaking sanctions which were set up against Russia following their invasion of Ukraine in 2022. There have also been allegations of breaking sanctions imposed against Iran, while the exchange has also been scrutinised over whether it allowed transactions that helped finance Hamas.
This represents one of the largest cases the Justice Department has ever conducted into a cryptocurrency company and a settlement of this nature and size would represent a historic resolution. Following the conviction of former FTX cryptocurrency exchange owner Sam Bankman-Fried for fraud and conspiracy charges earlier this month, it seems like Changpeng 'CZ' Zhao, the CEO of Binance, may still be in hot water.
The DOJ has been pushing for a broad leadership change at the company and CZ may still face criminal charges for allegations of money laundering, bank fraud, and breach of sanctions. The report noted that CZ is currently a resident of the United Arab Emirates, which does not have a U.S. extradition treaty, and therefore it is believed that if any charges are lodged in the United States he is unlikely to be apprehended. There is the slim chance that CZ may decide to come to the United States voluntarily to faces any of this charges if they are made. However, the UAE did sign a deal with the United States in 2022 in which they agreed to cooperate around cybercrime. At this time it remains unclear if that would apply to this case.
The investigation by the DOJ is being led by the criminal division’s money laundering and asset recovery section, while the national security division and the US attorney’s office in Seattle are also involved.
Other Legal Agency Lawsuits
The DOJ have not been the only ones on the tail of Binance. Other U.S. agencies and U.S. lawmakers have been keeping an increased watch on the exchanges activities, with the Securities and Exchange Commission (SEC) filing a lawsuit against both Binance and Coinbase back in June 2023. They also filed a suit against CZ for his mishandling customer funds, misleading investors and regulators, and breaking securities rules.
The Commodity Futures Trading Commission (CFTC) also alleged back in March 2023 that Binance and Zhao routinely broke US derivatives rules during its growth to become the world's largest digital-asset trading platform. At the time the regulator noted that Binance should have been registered with the agency for a number of years at that point, and they continue to violate the CFTC’s rules.
Binance were quick to contest the lawsuits, noting that they had actively cooperated with the regulators’ probes and were disappointed with the enforcement agencies actions. Regarding the CFTC suit, CZ noted back in March:
"the CFTC complaint “appears to contain an incomplete recitation of facts and that Binance doesn’t agree with how many of the issues are characterized. The SEC filing is an attempt by the agency to regulate with the blunt weapons of enforcement and litigation rather than the thoughtful, nuanced approach demanded by this dynamic and complex technology.”
In a court filing last month Binance noted:
“U.S. law governs domestically but does not control the world. Congress did not make the CFTC the world’s derivatives police.”
BNB Reacts
The native cryptocurrency token of the Binance exchange and Blockchain, the BNB token, has seen a substantial rise since the news broke. According to CoinGecko the price of the token has gone from a low of $244.31 up to a high of $266.86 over the previous 24 hours. This marks the tokens highest price point since back in June of this year. The price rise was seen mere hours following the news breaking on Bloomberg, and the BNB token was the the biggest gainer among the top 20 cryptocurrencies by market capitalization. It was followed by Bitcoin and Wrapped Bitcoin in the gains chart.
The reports clearly boosted the confidence of BNB holders that any potential deal would see the exchange continue its operations and end the investigations and turmoil surrounding the company. With the SEC and CFTC brining lawsuits against the exchange, the previous year has seen reduced investor confidence in the exchange, especially given the impact of the FTX collapse last year.
The stable growth in the token has been apparent over the previous week with a 5.86% growth, while it recorded a 21.67% rise over the past month. Overall the token is still down from its all-time high price of $686 during the 2021 bull market. Over the previous year the asset has managed to gain a 0.7% rise overall, which is considerably lower than other top assets due to the constant regulator and government issues associated with the exchange.
Good news for Binance users if the deal does go ahead and the end to the lawsuits is in sight. There is still a long road to go but knowing that another potential FTX market crash could be avoided through these actions is good news for once, as the last thing consumers need is another exchange collapse to impact the market.
Have a great day,
Peace. CryptoGod-1.
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