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Binance Announcement: Reaching Resolution With U.S. Regulators

source-logo  binance.com  + 1 more 21 November 2023 21:09, UTC

Today we are pleased to inform you that we’ve reached resolutions with the U.S. Department of Justice, Commodity Futures Trading Commission, the Office of Foreign Assets Control, and the Financial Crimes Enforcement Network related to their investigations into historical registration, compliance, and sanctions issues. These resolutions acknowledge our company’s responsibility for historical, criminal compliance violations, and allow our company to turn the page on a challenging yet transformative chapter of learning and growth. With the compliance and governance enhancements enshrined in our commitments, we can begin to share our vision for Binance’s exciting future and the future of the crypto industry. We are confident that Binance will emerge as a stronger company as we lay the foundation for the next 50 years.

While Binance is not perfect, it has strived to protect users since its early days as a small startup and has made tremendous efforts to invest in security and compliance. However, when Binance first launched, it did not have compliance controls adequate for the company that it was quickly becoming, and it should have. Binance grew at an extremely fast pace globally, in a new and evolving industry that was in the early stages of regulation, and Binance made misguided decisions along the way. Today, Binance takes responsibility for this past chapter.

Over the past two years, we have worked hard to restructure our organization and personnel and upgrade our systems. We have new leadership in place with deep compliance experience and impressive backgrounds ranging from top traditional financial institutions and leading tech companies, to law enforcement and major corporate entities. It is through this process that we have become a stronger, safer, and even more secure platform for our users.

Equally important, we havenever faltered in upholding our core values of user security and safety. We take our responsibility as a custodian very seriously and maintain 1:1 backing for every user asset.* This means that users can withdraw 100 percent of their assets from the platform at any time. Of note, in our resolutions with the U.S. agencies they:

  • do not allege that Binance misappropriated any user funds, and

  • do not allege that Binance engaged in any market manipulation.

Our deep bench of global leaders has positioned Binance for long-term growth. Our business is focused on protecting our users and building a platform for decades to come. This focus and experience bring added resilience so we can continue to operate on behalf of our users not just for the next five years, but for the next fifty years or more. And our former CEO remains Binance’s majority shareholder and a resource available for consultation on historical areas of our business.

Positioning ourselves for the next fifty years means understanding crypto’s current challenges and working to develop industry-leading standards to address them, including in the areas of compliance, security, cooperation with law enforcement, and user transparency.

As a result of these updates and work with global regulators, Binance is a much stronger company today than it was in the past. We have learned valuable lessons that are applicable across the industry in support of crypto users. We acknowledge that alongside compliance, transparency is essential to rebuilding industry confidence amid challenging market conditions and industry mismanagement. Learning from our own past, we are proud to usher in some of the most significant investments in compliance, security, and transparency of any company in our industry.

Leadership Change

Effective immediately, Richard Teng, Binance’s now-former Global Head of Regional Markets, succeeds CZ as CEO. Richard is a highly qualified leader and, with over three decades of financial services and regulatory experience, he will navigate the company through its next period of growth. Prior to joining Binance, Richard was the CEO of the Financial Services Regulatory Authority at Abu Dhabi Global Market; the Chief Regulatory Officer of the Singapore Exchange (SGX), and the Director of Corporate Finance in the Monetary Authority of Singapore.

Compliance and Security

Binance has been systematically working to restructure our organization and personnel, upgrade our systems, and establish a new industry standard in compliance. For example, we have updated and expanded our in-house anti-money laundering (“AML”) detection and analytics capabilities. Binance’s AML compliance is now an industry standard, and Binance continues to make improvements to its comprehensive AML policies. Binance also plays a significant leadership role in helping law enforcement combat cyber and financial crime and terrorism.

Binance was one of the first major exchanges outside of the United States to require mandatory KYC procedures for all users. Today, potential users (none of whom may be a U.S. person) must provide valid identification and submit a “selfie” photograph, which Binance checks against their identification with the support of world-class vendors. Binance also conducts searches via World-Check to identify, for example, any criminal history, connection to terrorism, placement on Politically Exposed (“PEP”) lists, and sanctions watch lists. Binance also utilizes both real-time and post-transaction monitoring tools to detect and stop suspicious transactions. In recent years, Binance has invested tremendous resources to enhance its compliance program. Today, Binance has new leadership in place with deep compliance backgrounds overseeing a team of hundreds of compliance-supporting personnel, including over 60 personnel with prior law enforcement or regulatory agency experience and more than 200 personnel with professional certificates in compliance, including Certified AML Specialists. In addition to the core compliance team, Binance employs hundreds of dedicated operational, product, and tech employees who support the development and execution of the company’s compliance programs.

Binance takes sanctions compliance seriously and has a standalone sanctions team which ensures that the organization diligently complies with global sanctions rules. Binance has also dedicated substantial resources and efforts to sanctions compliance. Today, in addition to KYC and IP blocking, Binance uses advanced third-party tools to voluntarily implement controls and restrictions related to sanctions laws of countries including the United States, including conducting real-time on-chain sanctions transaction monitoring and screening.

Law Enforcement Cooperation

Binance also employs multiple teams that regularly engage with law enforcement agencies and officials, which are collectively staffed with over 70 members. Binance has uncovered and proactively assisted law enforcement in addressing national security-related issues in countries across the world, including the United States. Moreover, from January 1 to November 13, 2023, Binance processed over 52,700 law enforcement requests, serving 12,699 registered law enforcement officers worldwide through its Government Law Enforcement Request System. This is in addition to over 50,000 requests that the team at Binance processed in 2022.

Binance proactively shares knowledge with law enforcement. In 2022, Binance conducted and participated in over 70 workshops training law enforcement on countering cyber- and financial crime across the world. Building on these efforts, in September 2022, Binance announced a formal Global Law Enforcement Training Program designed to help law enforcement detect and combat financial and cybercrimes.

In 2023, our dedicated Law Enforcement Training Team, together with support from our Investigations Team, delivered 120 onsite or online trainings and workshops that invariably received a very positive response from the law enforcement community.

Binance is pleased to be one of the most significant global partners for law enforcement in its fight to combat illicit financial activity around the world.

Commitment to Transparency

Binance carefully safeguards its customers’ assets. Users can always withdraw 100 percent of their assets from the platform at any time. As part of its commitment to transparency, Binance has shared its cold and hot wallet addresses, as well as published Merkle tree proof of reserves and proof of collateral for B-Tokens.

Binance has also established user security measures including the Margin Insurance Fund to protect users from losses when their cross/isolated margin equity is less than zero or when a user is unable to repay their debts. Binance is one of the first cryptocurrency exchanges with a secure fund — known as the Secure Asset Fund for Users (“SAFU”) — to safeguard users in extreme cases. Binance has publicized the wallet addresses for SAFU.

Binance pairs its security measures with education initiatives to allow users to protect themselves and better understand the cryptocurrency ecosystem. As part of its commitment to advancing cryptocurrency education for all, Binance has made publicly available on Binance Academy more than 430 articles, as well as glossary entries and in-depth courses relating to cryptocurrency in 30 languages; collaborated with more than 70 universities across 25 countries to deliver cryptocurrency and Web3 knowledge; and collaborated with local partners to launch an anti-scam campaign to empower users to identify and avoid scammers.

The Future of Cryptocurrency

We strongly believe that the crypto industry and Binance have a bright future.

We have built a community and an ecosystem that empowers individuals to harness the power of blockchain technology to unlock opportunities for their families, communities, and economies around the world, and we are committed to ensuring that the transformative power of these technologies is experienced by more people worldwide.

*Note: Assets held in Earn accounts are sometimes backed by collateral in a different token than what was invested, although this should not impact Binance’s ability to honor redemptions 1:1.


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