Round Up: US Treasury Announces Largest Settlements in History with Binance for Violations of AML and Sanctions Laws
US Department of the Treasury: U.S. Treasury Announces Largest Settlements in History with World’s Largest Virtual Currency Exchange Binance for Violations of U.S. Anti-Money Laundering and Sanctions Laws
The U.S. Department of the Treasury, through the Financial Crimes Enforcement Network (FinCEN), the Office of Foreign Assets Control (OFAC), and IRS Criminal Investigation (CI), has taken unprecedented action to hold Binance Holdings Ltd. and its affiliates (collectively, Binance) accountable for violations of the U.S. anti-money laundering (AML) and sanctions laws that protect American national security and the integrity of the international financial system. Binance is the world’s largest virtual currency exchange, responsible for an estimated 60% of centralized virtual currency spot trading.
Today, Binance settled with FinCEN and OFAC for violations of the Bank Secrecy Act (BSA) and apparent violations of multiple sanctions programs. The violations include failure to implement programs to prevent and report suspicious transactions with terrorists — including Hamas’ Al-Qassam Brigades, Palestinian Islamic Jihad (PIJ), Al Qaeda, and the Islamic State of Iraq and Syria (ISIS) — ransomware attackers, money launderers, and other criminals, as well as matching trades between U.S. users and those in sanctioned jurisdictions like Iran, North Korea, Syria, and the Crimea region of Ukraine. By failing to comply with AML and sanctions obligations, Binance enabled a range of illicit actors to transact freely on the platform. Today’s settlements are part of a global agreement simultaneous with Binance’s resolution of related matters with the Department of Justice (DOJ) and the Commodity Futures Trading Commission (CFTC)… Read the full press release here: https://home.treasury.gov/news/press-releases/jy1925
US Department of the Treasury: Remarks by Secretary of the Treasury Janet L. Yellen at Press Conference Announcing New Treasury Action Against Illicit Finance
Good afternoon. I’m very glad to join Attorney General Garland, Deputy Attorney General Monaco, and CFTC Chairman Behnam for such an important occasion.
We’re here today to announce the Treasury Department’s historic action—the largest enforcement action in Treasury’s history—against Binance—the world’s largest virtual currency exchange—for its consistent and egregious violations of U.S. anti-money laundering and sanctions laws.
Protecting the U.S. financial system, and through that, the global financial system, is core to the Treasury Department’s mission. And, ever since Binance launched its convertible virtual currency platform, it has knowingly evaded the U.S. laws designed to protect these systems.
Over more than three years, FinCEN, OFAC, and IRS Criminal Investigation thoroughly investigated key aspects of Binance’s activities. Our work revealed that Binance claimed to have exited the U.S. market years ago, but actually did not, retaining U.S. users and other significant ties with the United States. It also had critical gaps in its anti-money laundering program and practices, from a lack of risk-based procedures for various offerings to instructing staff to withhold information from law enforcement. It deliberately undermined its own sanctions monitoring controls, and it failed to report suspicious transactions… Read the full remarks here: https://home.treasury.gov/news/press-releases/jy1926
OFAC (Office of Foreign Assets and Control): OFAC Settles with Binance Holdings, Ltd. for $968,618,825 Related to Apparent Violations of Multiple Sanctions Programs
Binance Holdings, Ltd. (“Binance”), a Cayman Islands virtual currency exchange with affiliates around the world, has agreed to pay $968,618,825 to settle its potential civil liability for 1,667,153 apparent violations of multiple sanctions programs administered by the Office of Foreign Assets Control (OFAC). For over five years, between August 2017 and October 2022, Binance matched and executed virtual currency trades on its online exchange platform between U.S. person users and users in sanctioned jurisdictions or blocked persons. Although Binance took steps to project an image of compliance, including by misleading third parties about its controls, senior Binance management knew of and permitted the presence of both U.S. and sanctioned jurisdiction users on its platform, and did so despite understanding that Binance’s trade matching algorithm could cause violations of OFAC-administered sanctions programs due to the presence of U.S. users on the platform. In addition to disregarding known sanctions risks, Binance management also took steps to undermine its own compliance function, encouraging users to circumvent the company’s own ostensible controls… Read the Enforcement release here: https://ofac.treasury.gov/system/files/2023-11/20231121_binance.pdf
OFAC (Office of Foreign Assets and Control): Settlement agreement between OFAC and with Binance Holdings, Ltd.
From approximately August 2017 to October 2022 (the “Relevant Period”), Respondent matched and executed vi1tual currency trades on its online exchange platfonn between U.S. person users and users in sanctioned jurisdictions or blocked persons. In doing so, Respondent appears to have violated multiple OFAC sanctions prohibitions across various U.S. sanctions programs when, among other things, it (i) engaged in the direct or indirect exportation or other supply of goods and services from the United States, or by U.S. persons, to users whom Respondent identified through its Know Y our Customer (KYC) process, Internet Protocol (IP) address, phone number or other means, as being located in Iran, Syria, North Korea, the Crimea Region of Ukraine, Cuba, the so-called Donetsk People’s Republic (“DNR”), the so-called Luhansk People’s Republic (“LNR”), or blocked; and (ii) caused U.S. persons to engage directly or indirectly in transactions with users located in Iran, Syria, North Korea, the Crimea Region of Ukraine, Cuba, the DNR, the LNR, or blocked persons, by matching such U.S. users to patties in sanctioned jurisdictions or blocked persons… Read the Settlement agreement here: https://ofac.treasury.gov/system/files/2023-11/20231121_binance_settlement.pdf
US Department of Justice: Binance and CEO Plead Guilty to Federal Charges in $4B Resolution
Binance Admits It Engaged in Anti-Money Laundering, Unlicensed Money Transmitting, and Sanctions Violations in Largest Corporate Resolution to Include Criminal Charges for an Executive.
Binance Holdings Limited (Binance), the entity that operates the world’s largest cryptocurrency exchange, Binance.com, pleaded guilty today and has agreed to pay over $4 billion to resolve the Justice Department’s investigation into violations related to the Bank Secrecy Act (BSA), failure to register as a money transmitting business, and the International Emergency Economic Powers Act (IEEPA).
Binance’s founder and chief executive officer (CEO), Changpeng Zhao, a Canadian national, also pleaded guilty to failing to maintain an effective anti-money laundering (AML) program, in violation of the BSA and has resigned as CEO of Binance… Read the full press release here: https://www.justice.gov/opa/pr/binance-and-ceo-plead-guilty-federal-charges-4b-resolution
US Department of Justice: Deputy Attorney General Lisa O. Monaco Delivers Remarks Announcing Binance and CEO Guilty Pleas to Federal Charges in $4B Resolution
Today is a watershed moment. The Department of Justice and its partners are holding accountable the world’s largest cryptocurrency exchange and the CEO who ran it, for their criminal conduct.
Binance vaulted to the top of the crypto market in part through the scheme exposed today: by pursuing growth, market share, and profits at the expense of compliance with U.S. law.
Today’s charges and guilty pleas – combined with a more than $4 billion financial penalty – demonstrate the Justice Department’s commitment to corporate accountability. And they send an unmistakable message to crypto and defi companies: if you serve U.S. customers, you must obey U.S. law.
A corporate strategy that puts profits over compliance isn’t a path to riches. It’s a path to federal prosecution.
As detailed in the statement of facts, Changpeng Zhao was warned by his own compliance team that Binance lacked basic safeguards to prevent users from evading U.S. sanctions law… Read the full remarks here: https://www.justice.gov/opa/speech/deputy-attorney-general-lisa-o-monaco-delivers-remarks-announcing-binance-and-ceo-guilty
US Department of Justice: Attorney General Merrick B. Garland Delivers Remarks Announcing Binance and CEO Guilty Pleas to Federal Charges in $4B Resolution
I am joined today by Treasury Secretary Janet Yellen, Deputy Attorney General Lisa Monaco, and CFTC Chairman Russ Behnam.
We are here today to announce that the Justice Department has secured felony guilty pleas from the world’s largest cryptocurrency exchange, Binance, and from its founder and CEO, Changpeng Zhao, also known as CZ.
Separate from the criminal enforcement actions the Justice Department is announcing today, Secretary Yellen and Chairman Behnam will also announce civil regulatory enforcement actions that the Treasury Department and the CFTC are taking against Binance.
While criminal and civil enforcement actions are subject to different legal standards, this collective effort represents the whole of government approach that we are taking to combat corporate crime.
Binance has agreed to plead guilty to willfully violating the Bank Secrecy Act, knowingly failing to register as a money transmitting business, and willfully violating the International Emergency Economic Powers Act… Read the full remarks here: https://www.justice.gov/opa/speech/attorney-general-merrick-b-garland-delivers-remarks-announcing-binance-and-ceo-guilty
FinCEN (Financial Crimes Enforcement Network): FinCEN Announces Largest Settlement in U.S. Treasury Department History with Virtual Asset Exchange Binance for Violations of U.S. Anti-Money Laundering Laws
The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) took unprecedented action to hold Binance Holdings Ltd. and several affiliates (collectively, Binance) accountable for willful violations of the Bank Secrecy Act and its implementing regulations. FinCEN’s consent order assesses a civil money penalty of $3.4 billion, imposes a multi-faceted five-year monitorship overseen by FinCEN, and requires significant compliance undertakings, including undertakings to ensure Binance’s complete exit from the United States… Read the full press release here: https://www.fincen.gov/news/news-releases/fincen-announces-largest-settlement-us-treasury-department-history-virtual-asset
Link to FinCEN Binance Consent Order: https://www.fincen.gov/sites/default/files/enforcement_action/2023-11-21/FinCEN_Consent_Order_2023-04_FINAL508.pdf
IRS (Inland Revenue Service): Binance and CEO plead guilty to federal charges in $4 billion resolution
Binance Holdings Limited (Binance), the entity that operates the world’s largest cryptocurrency exchange, Binance.com, pleaded guilty today and has agreed to pay over $4 billion to resolve the Justice Department’s investigation into violations related to the Bank Secrecy Act (BSA), failure to register as a money transmitting business, and the International Emergency Economic Powers Act (IEEPA).
Binance’s founder and chief executive officer (CEO), Changpeng Zhao, a Canadian national, also pleaded guilty to failing to maintain an effective anti-money laundering (AML) program, in violation of the BSA and has resigned as CEO of Binance.
Binance’s guilty plea is part of coordinated resolutions with the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) and Office of Foreign Assets Control (OFAC) and the U.S. Commodity Futures Trading Commission (CFTC).
“Binance became the world’s largest cryptocurrency exchange in part because of the crimes it committed – now it is paying one of the largest corporate penalties in U.S. history,” said Attorney General Merrick B. Garland. “In just the past month, the Justice Department has successfully prosecuted the CEOs of two of the world’s largest cryptocurrency exchanges in two separate criminal cases. The message here should be clear: using new technology to break the law does not make you a disruptor, it makes you a criminal”… Read the full press release here: https://www.irs.gov/compliance/criminal-investigation/binance-and-ceo-plead-guilty-to-federal-charges-in-4-billion-resolution
CFTC (Commodity Futures Trading Commission): Binance and Its CEO, Changpeng Zhao, Agree to Pay $2.85 Billion for Willfully Evading U.S. Law, Illegally Operating a Digital Asset Derivatives Exchange, and Other Violations
The Commodity Futures Trading Commission today announced Changpeng Zhao, and his companies Binance Holdings Limited, Binance Holdings (IE) Limited, and Binance (Services) Holdings Limited (together, Binance) agreed to a proposed consent order for permanent injunction, civil monetary penalty, and equitable relief that, if entered by the U.S. District Court for the Northern District of Illinois, will resolve all charges the CFTC brought against Zhao and Binance for knowingly disregarding provisions of the Commodity Exchange Act (CEA) to profit from their operation of an illegal digital assets derivative exchange.
The proposed consent order requires Binance to disgorge $1.35 billion of ill-gotten gains and pay a $1.35 billion civil monetary penalty to the CFTC, and obliges Zhao to pay a $150 million civil monetary penalty to the CFTC. In addition, the order permanently enjoins Zhao and Binance from willfully evading the CEA; acting as an unregistered futures commission merchant (FCM); operating an illegal digital asset derivatives exchange; and failing to have adequate know-your-customer compliance controls among other illegal activities in the order. The defendants must also certify that certain remedial measures have been implemented and Binance must further certify it will take certain remedial steps in the future, including no longer allowing “sub-accounts” to circumvent Binance’s newly implemented compliance controls… Read the full press release here: https://www.cftc.gov/PressRoom/PressReleases/8825-23
CFTC (Commodity Futures Trading Commission): Binance Former Chief Compliance Officer, Samuel Lim, Agrees to Pay $1.5 Million for Willfully Evading U.S. Law, and Aiding and Abetting the Illegal Operation of a Digital Asset Derivatives Exchange, and Other Violations
The Commodity Futures Trading Commission today announced former Binance Chief Compliance Officer, Samuel Lim, agreed to a proposed consent order for permanent injunction, civil monetary penalty, and equitable relief that, if entered by the U.S. District Court for the Northern District of Illinois, will resolve all charges the CFTC brought against Lim for violating the Commodity Exchange Act (CEA) and willfully aiding and abetting Binance’s numerous violations of the CEA as detailed in the CFTC filing against Binance today. [See CFTC Press Release No. 8825-23]
The proposed consent order requires Lim to pay a $1.5 million civil monetary penalty.
In addition, it permanently prohibits Lim from willfully evading the CEA. The Consent Order also permanently prohibits Lim from, directly or indirectly, acting as an unregistered futures commission merchant (FCM); operating an illegal digital asset derivatives exchange; and failing to have adequate know-your-customer compliance controls among other illegal activities described in the proposed order… Read the full press release here: https://www.cftc.gov/PressRoom/PressReleases/8826-23
CFTC (Commodity Futures Trading Commission): Statement of Chairman Rostin Behnam Regarding Binance and its Founder
Good afternoon. Thank you, Attorney General Garland, Treasury Secretary Yellen, Deputy Attorney General Monaco, and all of our law enforcement counterparts.
Today, the CFTC stands with the Department of Justice and the Treasury Department in protecting U.S. investors and financial markets from those who sought to create an empire through a calculated strategy of regulatory avoidance and arbitrage, outright defiance of the law, and breaching the fundamental principles of market behavior.
Today, the CFTC agreed to resolve charges against Binance, its founder and CEO, Changpeng Zhao, and its former chief compliance officer Samuel Lim. Binance is the world’s largest digital asset exchange and offers trading in spot digital assets and digital asset derivatives, including CFTC jurisdictional products such as bitcoin futures, options, and swaps. The proposed orders impose a civil monetary penalty and disgorgement totaling $2.7 billion against Binance, a $150 million civil monetary penalty against Zhao and a $1.5 million penalty against Lim… Read the full statement here: https://www.cftc.gov/PressRoom/SpeechesTestimony/behnamstatement11213
CFTC (Commodity Futures Trading Commission): Statement of Commissioner Kristin N. Johnson Regarding CFTC’s Landmark Resolution of Charges against Binance and Its CEO and CCO
Today the Commodity Futures Trading Commission (CFTC) announced the filing of a proposed consent order in its litigation against three affiliated entities of the cryptocurrency exchange Binance, Binance’s founder and chief executive officer (CEO) Changpeng Zhao, and former Binance chief compliance officer (CCO) Samuel Lim. Pending approval by Judge Manish S. Shah of the United States District Court for the Northern District of Illinois, this order will resolve the CFTC’s litigation against Binance, Zhao, and Lim filed in March of this year. The Commission’s complaint charged the defendants with offering and executing illegal off-exchange futures, options, and retail commodity transactions; failing to register as a futures commission merchant and a designated contract market or swap execution facility; failing to diligently supervise, including failing to maintain a Customer Identification Program (CIP), know your customer (KYC) procedures, or an anti-money laundering (AML) program; and conducting activities designed to willfully evade requirements of the Commodity Exchange Act (the CEA) and Commission Regulations… Read the full statement here: https://www.cftc.gov/PressRoom/SpeechesTestimony/johnsonstatement112123
CFTC (Commodity Futures Trading Commission): Statement of Commissioner Christy Goldsmith Romero on Bringing Binance and its Founder to Justice
Today, the CFTC has filed with the court a proposed resolution of the case against Binance, which operates the world’s largest digital asset trading platform, its founder and CEO Changpeng Zhao, and its Chief Compliance Officer Samuel Lim, in connection with proposed resolutions of a criminal case by the Department of Justice, and a civil case by the Department of Treasury’s Financial Crimes Enforcement Network (“FinCEN”) and Treasury’s Office of Foreign Assets Control (“OFAC”). The case is resolved for $2.8 billion, a ban from operating unregistered in CFTC-regulated markets, changes to implement Know Your Customer (KYC) controls, and removing accounts that violate the new controls, including U.S. trading firms.
The CFTC has zero tolerance for crypto platforms used for illicit finance. Binance was aware that its platform facilitated illicit activity by terrorist organizations like Hamas, darknet marketplaces like Hydra, and others. Instead of shutting down this criminal activity financing, Binance turned a blind eye and even advised users how to circumvent Binance’s superficial controls… Read the full statement here: https://www.cftc.gov/PressRoom/SpeechesTestimony/romerostatement112123
CFTC (Commodity Futures Trading Commission): Statement of Commissioner Caroline D. Pham Regarding Binance Consent Orders
Commodity Futures Trading Commission (CFTC) Commissioner Caroline D. Pham released the following statement regarding the CFTC’s consent orders related to Binance announced today:
“These enforcement actions, including separate consent orders against two individuals with hundreds of millions of dollars in penalties, demonstrate that the CFTC is committed to holding management accountable. It should be crystal clear that the CFTC will not stop in its pursuit of non-U.S. entities, and that the CFTC does not recognize any limits on its exercise of its broad Dodd-Frank authorities. The CFTC continues to bring severe penalties—over a billion dollars—against crypto trading platforms for alleged failures to register properly and other violations… Read the full statement here: https://www.cftc.gov/PressRoom/SpeechesTestimony/phamstatement112123b
