i2c - The Credit Economy June 2023

Report: DOJ and Binance Negotiating Resolution to Investigation

The U.S. Justice Department is reportedly negotiating with cryptocurrency exchange Binance Holdings to resolve a long-standing investigation.

The department is seeking a settlement of over $4 billion from Binance, which would mark one of the largest penalties ever imposed in a criminal cryptocurrency case, Bloomberg reported Monday (Nov. 20), citing unnamed sources.

The negotiations between the Justice Department and Binance also include the possibility of criminal charges against Changpeng Zhao, the founder of Binance, according to the report.

Neither the Justice Department nor Binance immediately replied to PYMNTS’ request for comment.

The investigation, which spans several years, focuses on allegations of money laundering, bank fraud and violations of sanctions, according to the report. Led by the criminal division’s money laundering and asset recovery section, along with the national security division and the U.S. attorney’s office in Seattle, the case is one of the largest ever conducted into a cryptocurrency company.

A resolution could be announced by the end of the month, the report said. However, the negotiations remain fluid and the timing, structure and specific charges of the settlement are yet to be determined.

The resolution seeks to strike a balance that would allow Binance to continue operating, preventing a collapse that could have negative consequences for markets and crypto holders, per the report.

Market reaction to the news of the negotiations has been mixed, according to the report. Following the publication of news of the potential settlement, the BNB cryptocurrency experienced an 8.5% increase in value.

Binance has already faced legal and regulatory actions from the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), the report said.

The United Arab Emirates (UAE), where Zhao resides, does not have an extradition treaty with the U.S., per the report. Therefore, for Binance’s founder to face criminal charges, he would need to voluntarily come to the United States.

It was reported in May that the Justice Department was probing whether Binance violated U.S. sanctions against Russia. Before that, it was reported that the firm was in discussions with the department to resolve earlier complaints that it was used to skirt sanctions against Iran.