Binance issued a statement on November 21 regarding its handling of investigations from the US Department of Justice (DOJ) and other agencies.
There, Binance stated that it is pleased to announce the resolution and admit to past misconduct. The crypto exchange company said:
“When Binance first launched, it did not have sufficient compliance controls for the company it was quickly becoming… Binance made misleading decisions along the way. Today, Binance takes responsibility for this past chapter.”
The company said the current resolutions recognize its role in “historic, criminal compliance violations” and allow it to “turn the page.”
Binance emphasized that US authorities are not alleging that it has embezzled user funds or engaged in market manipulation. In that regard, it mentioned its other promises, such as 1:1 support of user assets, its promise to enable 100% withdrawals at all times, and transparency around its own crypto addresses.
The company also highlighted its recent restructuring efforts and previous additions to compliance leadership. She noted that she will appoint her Global Head of Regional Markets, in the role of CEO, in line with a statement from former CEO Changpeng Zhao today.
Binance addresses KYC/AML issues
In a statement, the DOJ said Binance violated financial laws, including the Bank Secrecy Act (BSA), and failed to register as a money transmission company.
The DOJ said Binance was required to register with FinCEN as a money services company and create an effective anti-money laundering (AML) policy, but failed to do so. Elsewhere, Binance was said to have failed to implement comprehensive know-your-customer (KYC) procedures: it neglected monitoring, never reported suspicious activity to FinCEN, and sometimes supported users who provided only an email address.
Binance seemed to recognize these issues, noting that it recently expanded its anti-money laundering (AML) tools and capabilities. It also called itself one of the first major exchanges outside the US with mandatory KYC for all users.
International access to Binance is also an issue
The DOJ additionally said that Binance violated the International Emergency Economic Powers Act (IEEPA) and detailed several violations surrounding international transaction restrictions. The agency said Binance failed to implement controls that prevented users from transacting with sanctioned users and users in sanctioned areas.
The DOJ added that Binance did not fully block US customers in 2019 in accordance with the law. Binance instead focused on retaining valuable VIP customers and providing ways around restrictions.
Binance appeared to address these complaints again in its statement. Binance said it “takes sanctions compliance seriously,” has a standalone sanctions team, enforces KYC and IP blocks, and uses third-party tools to monitor transactions in real time. In addition, the company said it has teams with more than 70 members dedicated to law enforcement and information sharing.
Binance has pleaded guilty: its statements concern surveillance in the relevant areas without disputing specific allegations. The company has also committed to paying more than $4 billion in fines, retaining an appointed regulator for three years and improving compliance.
