Cryptocurrency is a precocious industry, in its lows as well as its highs. So it makes sense that Binance, the world’s largest crypto exchange, has agreed to pay a $4.3 billion fine for anti-money laundering, effortlessly surpassing penalties paid by miscreant financial firms that have been around for more than a century longer.
Binance boss Changpeng Zhao, a kingpin of crypto and the man who precipitated the downfall of bankrupt rival FTX, pleaded personally guilty on Tuesday to criminal violations. Under Zhao, Binance knowingly facilitated the flow of hundreds of millions of dollars between US users and parties in sanctioned countries such as Iran and North Korea and enabled terrorist groups including Al Qaeda and a wing of Hamas to transfer funds through the platform, according to US officials.
There are smoking guns aplenty in the lengthy enforcement release – including the firm’s chief compliance officer’s call for “creative means” to break the rules over serving US customers, and a suggestion that doing business with Iran is best done “non-openly.”
Six-year-old Binance isn’t just faster in racking up massive fines than other scandal-stricken companies, or more careless in its internal communications. It’s also being hit harder by government agencies keen to show they have crypto brought to heel. HSBC (HSBA.L), (0005.HK) in 2012 agreed to pay $1.9 billion for its role in facilitating drug cartels’ money laundering.
Goldman Sachs (GS.N)coughed up $2.9 billion in 2020 over charges it had bribed Malaysian government officials. Both snafus were serious enough to attract plenty of uncomfortable regulatory scrutiny for the centenarian companies, but neither firm lost its chief executive, even if Goldman boss David Solomon did take a temporary pay cut.
Binance’s mega-fine is at least in character for an industry known for going big. Crypto prices rose in spectacular fashion over the last bull market. After FTX founder Sam Bankman-Fried’s indictment last month and now a record fine for his biggest rival, the industry’s change in fortunes is looking similarly dramatic.
CONTEXT NEWS
Binance chief Changpeng Zhao stepped down and pleaded guilty to breaking US money-laundering laws as part of a $4.3 billion settlement announced on Nov. 21.
The US Treasury Department described the payments the company agreed to make to various government agencies as the “largest settlements in history.”
Binance is the world’s largest cryptocurrency exchange, which the Treasury estimates handles 60 per cent of centralized virtual currency spot trading.
