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Binance, the largest digital asset exchange in the world, is making preparations to pay fines and penalties in order to resolve ongoing law-enforcement investigations from US regulators.
The Extent of Binance Fines to Be Determined by US Regulators
The firm's chief strategy officer, Patrick Hillmann, disclosed in a February 15 report that Binance has been collaborating with regulators to address past compliance issues. Hillmann stated that Binance is in the process of working with regulators to determine the necessary remedial actions to be taken to make amends. He added that regulators would decide whether the outcome of ongoing investigations would involve only fines or more than that. Several investigations have been conducted on Binance in the US, including one by the Department of Justice in 2018 over potential breaches of anti-money-laundering laws. In March 2021, the Commodity Futures Trading Commission (CFTC) also investigated whether the company had offered crypto derivatives to US customers without registering with the agency. Furthermore, in February 2022, the Securities and Exchange Commission (SEC) launched an investigation into Binance's US division, focusing on trading companies related to CEO Changpeng Zhao.
Uncertain Regulatory Environment
Hillmann expressed confidence in Binance's ongoing discussions with regulators but was unable to provide a timeline for resolving the issue or the size of the fines that might be imposed. He noted that the lack of clarity in the US regarding cryptocurrency makes it a confusing time for the company. The SEC has recently intensified its "war on crypto," targeting certain staking services and stablecoins deemed to be covered by securities laws. Hillmann warned that the recent enforcement activity could have a long-lasting, deep chilling effect in the United States. He concluded that resolving the company's regulatory issues with US regulators would be beneficial for the company and its future. Recently, New York regulators took action against Paxos, preventing it from issuing more of the Binance-branded stablecoin BUSD, and US crypto exchange Kraken was fined $30 million and ordered to stop its staking services following SEC enforcement action.