Binance Talks about Compliance Gaps and Expects to Pay Penalties

Thursday, 16/02/2023 | 12:40 GMT by Damian Chmiel
  • The company's CSO confirmed that in the past, Binance had small "gaps" in its regulatory compliance.
  • Crypto exchange expects to pay penalties to resolve the US investigations.
Changpeng Zhao
Changpeng Zhao (Source: PC Tech Mag)

Binance, one of the world's largest crypto exchanges, has faced some compliance "gaps" in the past and expects to pay fines to settle with US regulators, Patrick Hillmann, the company's Chief Strategy Officer (CSO), admitted in a recent interview.

Binance Awaits Penalties for Past Regulatory Sins

According to Hillmann, Binance rose rapidly in a decentralized cryptocurrency environment and was developed by software engineers who were far from familiar with the intricate regulatory rules related to anti-money laundering and terrorist financing. He talked about small compliance "gaps" that might occur over the years. However, they have either already been patched or are currently being fixed. Despite this, it expects US regulators to impose financial penalties on the company for past actions.

Binance is currently working closely with regulators, including the Department of Justice (DoJ) and the Commodity Futures Trading Commission (CFTC), to determine the immediate remedies to be taken first. The DoJ is investigating Binance for potential violations of US money laundering laws. Meanwhile, the CFTC is conducting a separate investigation into Binance's offering of crypto derivatives to customers in the US without obtaining the necessary licenses.

Binance's CSO does not know how high the potential fines could be but admits that talks with regulators are moving in the right direction. However, he makes no secret that the current time for the cryptocurrency industry is complicated, with participants trying to understand how the US wants to approach the regulation of digital assets.

Watch the recent FMLS22 panel titled: "Regulation Roundup: Everything You Need to Know for 2023"

SEC Looks at Kraken, Paxos and Binance

The Securities and Exchange Commission (SEC) has stepped up its scrutiny of the digital asset industry over the past week. As reported by Finance Magnates, one of the largest US exchanges, Kraken, has paid a $30 million fine as part of a settlement over its staking program.

In turn, Paxos, which works closely with Binance, halted the mint of the new Binance USD (BUSD) stablecoins after news that the SEC was going to launch an investigation into the issuance of securities without proper authorizations. According to the regulator, BUSD bears the hallmarks of a security.

News of the suspension of the BUSD mint has caused turmoil in the industry, but Binance's Chief Executive, Changpeng 'CZ' Zhao, calmed clients by saying that funds are safe. However, he acknowledged that if the SEC intervenes in the stablecoin market, it could cause a move towards non-dollar tokens.

Binance, one of the world's largest crypto exchanges, has faced some compliance "gaps" in the past and expects to pay fines to settle with US regulators, Patrick Hillmann, the company's Chief Strategy Officer (CSO), admitted in a recent interview.

Binance Awaits Penalties for Past Regulatory Sins

According to Hillmann, Binance rose rapidly in a decentralized cryptocurrency environment and was developed by software engineers who were far from familiar with the intricate regulatory rules related to anti-money laundering and terrorist financing. He talked about small compliance "gaps" that might occur over the years. However, they have either already been patched or are currently being fixed. Despite this, it expects US regulators to impose financial penalties on the company for past actions.

Binance is currently working closely with regulators, including the Department of Justice (DoJ) and the Commodity Futures Trading Commission (CFTC), to determine the immediate remedies to be taken first. The DoJ is investigating Binance for potential violations of US money laundering laws. Meanwhile, the CFTC is conducting a separate investigation into Binance's offering of crypto derivatives to customers in the US without obtaining the necessary licenses.

Binance's CSO does not know how high the potential fines could be but admits that talks with regulators are moving in the right direction. However, he makes no secret that the current time for the cryptocurrency industry is complicated, with participants trying to understand how the US wants to approach the regulation of digital assets.

Watch the recent FMLS22 panel titled: "Regulation Roundup: Everything You Need to Know for 2023"

SEC Looks at Kraken, Paxos and Binance

The Securities and Exchange Commission (SEC) has stepped up its scrutiny of the digital asset industry over the past week. As reported by Finance Magnates, one of the largest US exchanges, Kraken, has paid a $30 million fine as part of a settlement over its staking program.

In turn, Paxos, which works closely with Binance, halted the mint of the new Binance USD (BUSD) stablecoins after news that the SEC was going to launch an investigation into the issuance of securities without proper authorizations. According to the regulator, BUSD bears the hallmarks of a security.

News of the suspension of the BUSD mint has caused turmoil in the industry, but Binance's Chief Executive, Changpeng 'CZ' Zhao, calmed clients by saying that funds are safe. However, he acknowledged that if the SEC intervenes in the stablecoin market, it could cause a move towards non-dollar tokens.

About the Author: Damian Chmiel
Damian Chmiel
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About the Author: Damian Chmiel
Damian's adventure with financial markets began at the Cracow University of Economics, where he obtained his MA in finance and accounting. Starting from the retail trader perspective, he collaborated with brokerage houses and financial portals in Poland as an independent editor and content manager. His adventure with Finance Magnates began in 2016, where he is working as a business intelligence analyst.
  • 1593 Articles
  • 36 Followers

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