Binance Prepares to Pay Fines for Past Regulatory Violations

  • Binance’s CSO said the company was working with regulators to figure out what remediations it has to go through to make amends for past compliance violations.
  • The executive said he was “highly confident and feeling really good” about where the discussions were going, and expected to settle the charges with monetary penalties.

Binance CEO Changpeng Zhao. CoinDesk

Binance, the world’s largest cryptocurrency exchange, is preparing to pay fines and penalties in order to make amends for past regulatory violations, The Wall Street Journal reported on 15 February.

The publication cited the firm’s chief strategy officer Patrick Hillmann, who said in an interview that Binance was working with regulators to figure out “what are the remediations we have to go through” to make amends for past compliance violations. His expectations were that the outcome of the ongoing investigations will likely be fines, but noted it “could be more” and that it was for the regulators to decide.

Hillmann explained that the company was started by software engineers that were unfamiliar with laws and regulations designed to prevent money laundering, sanctions evasion, and corruption, and that the lack of clarity for crypto in the U.S. made it a “very confusing time for us”. Despite that, he was “highly confident and feeling really good” about where the discussions with regulators were going, though he declined to estimate the size of the fines or when the investigations might be settled.

While Hillmann did not specify which investigations he was referring to, Binance has been the subject of several investigations in the U.S., including one launched by the Department of Justice (DoJ) in 2018 over potential anti-money-laundering (AML) law violations. In 2021 the Commodity Futures Trading Commission also looked into whether the exchange offered crypto derivatives to U.S. customers without a registration.

U.S. regulators have been increasing their scrutiny of crypto ever since cryptocurrency exchange FTX collapsed in November 2022. The latest attack was aimed at stablecoin issuer Paxos, with the New York Department of Financial Services (NYDFS) ordering the company to stop the issuance of Binance USD (BUSD), one of the largest stablecoins on the market. The Securities and Exchange Commission (SEC) had also issued a Wells Notice to Paxos, alleging that the BUSD stablecoin was an unregistered security, though the company said it “categorically disagrees” with the SEC and was prepared to “vigorously litigate” this issue if necessary.

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