Binance Busted: World’s Biggest Crypto Exchange Pleads Guilty!
Binance, the biggest cryptocurrency exchange globally in terms of trade volume, faced regulatory investigation earlier this year due to its failure to implement proper regulatory and legal measures to prevent illicit activities such as funding terrorism and drug deals, according to the US Department of Justice (DOJ) and the Commodity Futures Trading Commission (CFTC). On Tuesday, the CEO of Binance, Changpeng Zhao, admitted guilt and reached a settlement of 4.3 billion dollars.
But if you’re new to the world of crypto and want to know what Binance is, why it’s pleading guilty, and how this decision could affect the crypto industry in the future, here’s a quick guide. Let’s see.
What is Binance?
Changpeng Zhao founded the cryptocurrency exchange Binance in 2017. The company was originally based in China, then moved to Japan and then to Malta. Currently, it has no official headquarters. It became very popular and contributed to the explosion of cryptocurrencies worldwide with its easy-to-use interface, support for multiple cryptocurrencies, and low transaction costs.
Binance also has a cryptocurrency known as Binance Coin. Before the settlement, Binance held a 40 percent market share of crypto spot trading and topped the market, followed by Seychelles-based OKX with a 5.44 percent market share.
Binance gained notoriety by quickly building and breaking existing systems to gain a wider consumer base, often dipping its toes into unregulated areas, as the DOJ claims. It also led to its eventual downfall.
Why did Binance plead guilty?
According to authorities, Binance violated US anti-money laundering and sanctions laws and failed to report more than 100,000 suspicious transactions with organizations described as terrorist groups in the US, including Hamas, al-Qaeda and the Islamic State of Iraq and Syria, Reuters reported.
The exchange also never reported transactions with websites dedicated to selling child sexual exploitation material and was one of the largest recipients of ransomware revenue, the report states.
How will this affect the future of crypto?
Just like FTX, Binance also had similar issues with regulations and legal mechanisms to properly identify and report transactions by bad actors and for illegal purposes.
Binance acknowledged this in a statement issued by the company, which said: “When Binance first launched, it did not have adequate compliance controls for the company it was quickly becoming, and it should have. Binance grew very quickly globally in a new and emerging industry that was in the early stages of regulation, and Binance made some bad decisions along the way.
According to a CNN report, this is common rhetoric from companies in a similar situation. The report also featured industry experts who mentioned that the conclusion of this case should signal a more regulatory-focused approach by US institutions, which should also push crypto companies to create proper mechanisms to identify their user base. KYC is something that is expected to be the norm in the future.
Brian Armstrong, CEO of Binance competitor Coinbase, also wrote a lengthy post about X, emphasizing the need to uphold the rule of law. He said: “We took a lot of arrows operating here in the US due to the lack of regulatory clarity, and I hope today’s news acts as a catalyst to finally achieve that. Americans should not have to go to unregulated offshore exchanges to benefit from this technology. This industry should be built here To America, according to the rules, according to the law of the United States.
