The agreement will resolve criminal charges that Binance conducted an unlicensed money transmitter business, conspiracy and breaching sanctions regulations, the U.S. Department of Justice said.
Some of the charges, which are both criminal and civil, relate to practices that Reuters reported first in a series of articles in 2022.
Here are the key allegations against Binance, its founder Zhao and other executives.
UNLICENSED MONEY SERVICE BUSINESS
The U.S. said that Binance, Zhao and other executives “knowingly and willfully conspired” to operate as an unlicensed money services business (MSB) from August 2017 until October 2022.
The exchange failed to register with the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) as an MSB partly to prevent U.S. regulators discovering it facilitated crypto trades for its clients without proper checks on its users, the U.S. said.
The move was designed to allow Binance to “gain market share and profit as quickly as possible,” the U.S. said, with the exchange attracting a “substantial number of U.S. users” to its main website.
Binance “chose not to comply” with U.S. rules as it “determined that doing so would limit its ability to attract and maintain U.S. users.”
MONEY LAUNDERING CHECKS
The U.S. said that Binance facilitated “billions of dollars” of crypto transactions for its customers, including in the United States, without implementing so-called “know your customer” checks.
Binance’s compliance personnel, including its compliance officer, recognised that the exchange’s anti-money laundering controls “were inadequate and would attract criminals to the platform,” the U.S. said.
Binance processed transactions by operators of “illicit mixing services” used to obfuscate the provenance of crypto funds, and “laundered proceeds of darknet market transactions, hacks, ransomware, and scams,” the U.S. said.
Between August 2017 and April 2022, bitcoin worth $106 million was sent between Binance.com wallets and Hydra, a popular Russian darknet marketplace “frequently utilized by criminals that facilitated the sale of illegal goods and services,” the U.S. said.
SANCTIONS VIOLATIONS
The U.S. said that Binance had a “significant customer base” from some sanctioned jurisdictions and was aware that Iran represented “the majority of such customers.”
Binance knew that it would allow transactions between U.S. users and those subject to U.S. sanctions, “in violation with U.S. law,” the U.S. said.
From around January 2018 to May 2022, Binance processed 1.1 million crypto transactions worth at least $898.6 million between U.S. customers and those who lived in Iran, the U.S. said.
Around 2019, Binance continued to serve “thousands of users” identified as being from sanctioned countries, the U.S. said, including over 12,500 users who provided Iranian phone numbers.
‘TERRORIST’ FINANCING
Binance failed to report suspicious transactions associated with Palestinian militant group Hamas, the authorities said.
Crypto wallets at Binance were found to interact with bitcoin wallets associated with groups proscribed as terrorist organisations by the United States and other countries, including Islamic State, the armed wing of Hamas, al Qaeda, and the Palestine Islamic Jihad (PIJ), the U.S. said.
Source: Economy - investing.com
