Over the past 24 hours, Binance has experienced withdrawals of over $1 billion, not including Bitcoin, according to Nansen, a blockchain analysis firm. Zhao and others were charged with violation of the Bank Secrecy Act for not having an effective anti-money-laundering program, and for flagrantly disregarding US economic sanctions. As a result, Binance accepted forfeiture of $2.5 billion to the government and an additional fine of $1.8 billion, coming out to a grand total of $4.3 billion, which AG Merrick Garland cited as one of the largest fines ever obtained.
More than $1 billion has been withdrawn from Binance in the last 24 hours (not including Bitcoin) according to data from blockchain analysis company Nansen. This followed the news of CEO Changpeng Zhao stepping down and pleading guilty in a settlement to the Department of Justice, as part of a years-long investigation in which Binance agreed to pay $4.3 billion in fines. Binance's native token BNB has declined 8% over the same period. The exchange holds around $2.8 billion of BNB tokens, according to Nansen, and is still the world's largest crypto exchange with over $65 billion in assets. It remains to be seen if there is a significant liquidation of assets from the platform, but following the resolution with regulators and a recent announcement to improve security measures, it could have a positive impact on the crypto market in the long term. In the immediate aftermath of the news, almost all the top 100 cryptocurrencies have recovered, with Bitcoin being down 1.3%. BNB has seen the biggest decline, losing more than 9%.
What the future holds for Binance, the cryptocurrency giant, has become a multi-billion dollar question following CEO and founder Changpeng Zhao's plea deal and departure from his role. Facing time in prison in the United States for his alleged crimes, Chinese-born Zhao launched Binance in 2017, quickly drawing attention in the crypto world. Though the situation appears to be turbulent, experts CNBC spoke with believe the exchange will weather the storm. With Binance's agreement to comply with the DOJ, its three-year plan of regulatory compliance, and the company's significant reserves, Yadav, a professor of law and associate dean at Vanderbilt University, believes the $4 billion fine should not be too damaging. He stated, "This fine does not appear aimed at dealing a fatal blow to the exchange," citing CZ's wealth, continual trading activity, and Binance's dominance in the crypto industry.
Zhao and others were accused by the Justice Department of having infringed the Bank Secrecy Act by not enacting an effective anti-money-laundering program and for deliberately and systematically disregarding U.S. economic sanctions with the intention of profiting from the American market whilst disregarding laws in place. Binance has consented to remit $2.5 billion to the government and will pay a fine of $1.8 billion, leading to a total amount of $4.3 billion owed by the company. At a press conference, U.S. Attorney General Merrick Garland proclaimed that this was "one of the largest penalties we have ever obtained," and declared that "utilizing fresh technology to disobey the law doesn’t make you an innovator. It makes you a delinquent." Zhao took to X, formerly known as Twitter, to admit to his "mistakes" and accept responsibility. Richard Teng, a former monetary services regulator of Abu Dhabi, was chosen to be Zhao’s replacement. Teng, who lately served as head of regional markets globally at Binance, was additionally director of corporate finance at the Monetary Authority of Singapore. The action against Binance and its founder was a collaboration among the Department of Justice, the Commodity Futures Trading Commission and the Treasury Department. The Securities and Exchange Commission, however, was absent. Treasury Secretary Janet Yellen issued a release expressing that the exchange had enabled illicit actors to undertake more than 100,000 transactions to sponsor activities such as terrorism and illicit narcotics, along with permitting more than 1.5 million crypto trades that violated U.S. sanctions. It was also observed that Binance had allowed transactions related to terrorist groups, including Hamas' Al-Qassam Brigades, Palestinian Islamic Jihad, al-Qaida and ISIS, with Yellen adding in her statement that Binance "never filed a single suspicious activity report." Zhao’s bond of $175 million was secured with $15 million in cash and he will be facing a sentencing hearing on February 23rd.
Binance will remain in operation, but with revised regulations. It is obligated to keep its compliance measures up-to-date to be in accordance with United States anti-laundering laws. In addition, the company must hire an independent compliance monitor. On Tuesday, three criminal accusations were made against Binance, including running a money-transmitting enterprise without a license, breaching the International Emergency Economic Powers Act, and conspiring. Its opponents, mainly Coinbase, Kraken, and OKX, might try to benefit from this scenario, considering Coinbase and Kraken are already dealing with their own lawsuits from the SEC. Coinbase is being accused of operating an unauthorized financial exchange, broker, and clearinghouse. On Monday, the SEC sued Kraken alleging it combined $33 billion worth of consumer crypto resources with its own company resources, posing a major danger to its customers. As per Yadav of Vanderbilt University, Binance's reserves will be closely examined once its CEO leaves because Binance's endeavors to be more transparent since the FTX fiasco have been unsuccessful. Binance released its proof of reserves, a system that highlights its assets and liabilities, but these proofs of reserves are just based on information that can be taken from public blockchains and it does not equate to a full-scale audit. According to Yadav, "Binance's reserves will most likely be under scrutiny in the upcoming months and years" and "There have always been doubts surrounding Binance regarding its internal governance and management of risk." Moreover, Yadav added that the CFTC has investigated these connections between Binance and potential activities that violate the established regulations, because the exchange is notoriously opaque.
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