In a significant development for the cryptocurrency world, Binance, the largest exchange platform in the world, and its general director Changpeng Zhao have entered into an agreement with American authorities to pay a large sum of money and plead guilty to violating anti-money laundering laws. This marks a major blow to Binance, which has been under investigation by American authorities since at least 2018.
As part of their agreement with American authorities, Binance will pay two fines totaling several billion dollars to the US Treasury. Changpeng Zhao, also known as “CZ,” will plead guilty to violating US anti-money laundering laws while Binance will also plead guilty to violations of US law. Despite committing to no longer accepting American customers in 2019, Binance was found to have retained some American customers, particularly the most active and high-turnover ones. As part of their agreement, Binance has committed to using an external observer for compliance purposes for a period of three years.
The violations by Binance include a failure to implement anti-money laundering measures, allowing a wide range of criminal actors to conduct trades on the platform. The company has also been scrutinized for its role in allowing transactions carried out by groups such as Islamic State group, Al-Qaeda and Hamas. The actions highlight the challenges posed by digital currencies which are used by criminal organizations and offer certain anonymity and less robust money laundering safeguards than traditional financial systems which have far-reaching compliance obligations.
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