In a recent warning, financial intelligence platform FinTelegram highlighted the ongoing regulatory struggles of cryptocurrency giant Binance and included it in its Red Compliance List. In 2022, the UK’s Financial Conduct Authority (FCA) aired concerns over effectively supervising Binance‘s sprawling operations. These concerns were further compounded in November 2023 when Binance and its CEO Changpeng Zhao (CZ) conceded to violations of U.S. financial laws, including money laundering offenses. This admission culminated in a substantial $4.3 billion settlement, with CZ’s sentencing earmarked for February 2024.
The Case of Money Laundering and Sanctions Violations
In November 2023, Binance reached a settlement with the Financial Crimes Enforcement Network (FinCEN) and the Office of Foreign Assets Control (OFAC) over breaches of the Bank Secrecy Act (BSA) and infringements of several sanctions programs. The allegations pointed to Binance‘s failure to establish adequate mechanisms to deter and report dubious transactions involving terrorists, ransomware attackers, money launderers, and other criminals. Moreover, Binance was accused of facilitating trades between U.S. users and entities in sanctioned regions, including Iran, North Korea, Syria, and the Crimea area of Ukraine, thereby breaching AML and sanctions requirements and enabling illicit transactions on its platform.
FinCEN’s settlement mandates a $3.4 billion civil money penalty, a five-year monitorship, and significant compliance commitments, including Binance’s total withdrawal from the U.S. market. Concurrently, OFAC’s settlement imposes a $968 million penalty and a series of stringent sanctions compliance measures, further reinforcing the monitorship led by FinCEN.
Binance’s Operational Challenges
In alignment with the settlement, Binance consented to exit the U.S. market and has not yet attained registration as a Crypto Service Provider in the UK. Recent accounts from UK-based customers have shed light on troubling practices, such as unexplained account freezes hindering trades and withdrawals.
Queries to Binance’s customer service regarding these freezes often go unanswered, with vague references to ongoing account reviews potentially lasting up to a month. Binance’s terms of service also seemingly permit account suspensions without any given reason, adding to customer grievances.
Call to Action for Binance Users
Given these significant issues, FinTelegram issued a cautionary warning to all Binance customers, and it placed them on their Red Compliance List. FinTelegeram strongly recommends users withdraw their funds to protect their investments.
Under the leadership of the new CEO, Richard Teng, Binance has yet to show tangible progress toward achieving regulatory compliance.
Invitation for Information Sharing
We invite anyone who has encountered problems with Binance, including account suspensions, or possesses information about their operations to share their experiences. By utilizing the Whistle42 whistleblower system, individuals can anonymously contribute valuable insights, aiding in the pursuit of transparency and accountability within the cryptocurrency ecosystem, as emphasized by FinTelegram’s ongoing request for information.
