Does the end of the case against Binance mark a new beginning for cryptocurrencies?
“The enforcement action against Binance, that’s allowing us to kind of turn the page on that and hopefully close that chapter of history,” Armstrong said.
“There are many crypto companies that are helping build the crypto economy and change our financial system globally. But many of them are still small startups. I think that regulatory clarity is going to help bring in more investment, especially from institutions.”
Both Binance and Coinbase are the subject of legal action by the U.S. Securities and Exchange Commission (SEC).
Binance last week agreed to a $4 billion settlement with the U.S. Department of Justice (DOJ). As part of that agreement, founder and CEO Changpeng Zhao resigned from the company and will plead guilty to violating money laundering rules.
Binance itself had been accused of violating the federal Bank Secrecy Act and of breaking sanctions on Iran.
“Binance became the world’s largest cryptocurrency exchange in part because of the crimes it committed — now it is paying one of the largest corporate penalties in U.S. history,” Attorney General Merrick Garland said last week.
Armstrong rejected the notion that crypto is primarily used for illicit purposes such as fraud, money laundering and terrorist financing, a common argument from financial firms that have avoided entering into the sector because of compliance concerns.
“It’s true that there have been some small amount of illicit activity in crypto but it’s actually less than 1% from what we’ve seen. If you look at illicit uses of cash it’s oftentimes more than that,” Armstrong told CNBC.
But in Binance’s case, PYMNTS wrote last week, the company’s compliance failures “were by design: keeping the doors open to users of all stripes was crucial to Binance’s growth and provided a significant source of revenue.”
Meanwhile, Zhao may have pleaded guilty, but he is still fighting the DOJ’s efforts to keep him in the U.S. ahead of his sentencing next year.
Federal prosecutors say that if Zhao returns home to the United Arab Emirates, he’ll be able to stay there as long as he likes, as that country has no extradition agreement with the U.S.
In a court filing last week, Zhao’s lawyers argue he is not a flight risk, noting that he voluntarily returned to the U.S. to plead guilty.