DOJ Unveils Extensive Monitorship Over Binance Operations

DOJ Unveils Extensive Monitorship Over Binance Operations – The United States Department of Justice (DOJ) unsealed Binance’s compliance commitments, showcasing substantial government scrutiny over the crypto exchange’s operations. Binance now has additional compliance responsibilities, which involve collaborating to provide U.S. authorities with access to all requested documents, records, and resources.

In an analysis shared on X (formerly Twitter), John Reed Stark, a former Securities and Exchange Commission (SEC) official, classified the “exhaustive list” of Binance’s new compliance commitments as a “consulting firm’s wish list” that will likely shut down the platform. Binance’s new obligations are described in an 11-page document and include cooperation to grant authorities access to documents, records and resources at their request.

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Including access to information related to its “former employees, agents, intermediaries, consultants, representatives, distributors, licenses, contractors, suppliers, and joint venture partners,” noted Stark. Various divisions within the DOJ’s criminal division will meticulously oversee the exchange’s operations. This includes divisions focusing on money laundering and asset recovery, national security, counterintelligence, export control, and the office of the United States Attorney for the Western District of Washington.

As previously revealed, Binance’s agreement with the U.S. government entails five years of supervision by the Financial Crimes Enforcement Network (FinCEN). This unparalleled oversight is expected to incur significant costs for the exchange, potentially amounting to millions of dollars. According to Stark: “Binance’s settlement requires it to offer years of instantaneous access, audit, examination and inspection to DOJ, FinCEN and all types of financial regulators and law enforcement, exposing the company — and its customers — to a 24/7, 365-days-a-year financial colonoscopy.”

On November 21, Binance and its former CEO, Changpeng “CZ” Zhao, acknowledged breaching U.S. laws related to money laundering and terror financing, agreeing to a $4.3 billion fine. The U.S. SEC cites evidence from the DOJ’s enforcement actions and settlements, as revealed in Binance’s recently unsealed court records, to bolster its case against the exchange and Zhao.

On June 5, the SEC filed 13 charges against Binance, alleging unregistered offers and sales of BNB and Binance USD (BUSD) tokens, as well as the Simple Earn, BNB Vault products, and the staking program. Additionally, the SEC claims that Binance neglected to register its platform as an exchange or broker-dealer clearing agency. With its latest filing, the regulator is asking the court to take a “judicial notice” of the facts presented in Binance’s settlement. 

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“Which means that the SEC wants the Judge to declare a fact presented as evidence as true without a formal presentation of evidence,” said Stark. The SEC is leveraging the settlement to contest Binance’s recent motion to dismiss the case, weakening the exchange’s assertions regarding its presence and activities in the U.S. over the preceding years. As per its settlement with the DOJ, Binance had over three million U.S. customers by March 2018, and around 30% of its web traffic originated from the United States as of June 2019.

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