- Binance has reached a settlement with US regulators to pay out over $4 billion in fines.
- The treasury department says the company enabled transactions from Hamas, the Islamic State, and Al Qaeda.
- A lawsuit from the CFTC said Binance employees joked about transactions with Hamas.
Binance on Tuesday reached a settlement with US regulators — including the justice and treasury departments — to pay $4.3 billion in fines for violating anti-money laundering and sanctions laws.
Changpeng “CZ” Zhao, the cofounder of Binance and a central figure in the crypto world, is also stepping down as CEO under the settlement.
The treasury department said Binance failed to report over 100,000 suspicious transactions involving terrorist groups, ransomware, child sexual exploitation material, and scams.
Chief among these is the accusation that Binance was used to send money to the al-Qassam Brigades, the militant wing of Hamas, the Palestinian Islamic Jihad, al-Qaeda, and the Islamic State of Iraq and Syria.
The Hamas transactions were acknowledged in February 2019 by Binance’s chief compliance officer at the time, Samuel Lim, according to a Commodity Futures Trading Commission lawsuit filed in March against the crypto exchange.
Lim had been told about “HAMAS transactions,” and responded by saying that terrorists often send “small sums” of money because “large sums constitute money laundering,” the CFTC complaint said.
“Can barely buy an AK-47 with 600 bucks,” the colleague replied, per the complaint.
The complaint outlined several other messages between Lim and his staff that regulators said were clear signs Binance knew illegal transactions could and were being made through its services.
“I HAZ NO CONFIDENCE IN OUR GEOFENCING,” Lim was told by a Binance employee, who was tasked with reporting money laundering, the complaint said.
On top of Tuesday’s settlement, which also resolves the March CFTC complaint, Zhao is pleading guilty to breaking anti money-laundering law, per the justice department. Zhao will personally pay $50 million in fines, and faces up to 18 months in prison, The New York Times reported.
The settlement represents the culmination of long-running scrutiny from regulators against the cryptocurrency exchange. The justice department opened an investigation into Binance’s compliance with anti money laundering law in 2018.
“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 on Tuesday.
Binance and its former CEO struck an upbeat tone after the settlement was announced. Binance acknowledged the settlement and Zhao’s resignation in a blog on Tuesday, saying Richard Teng — who was the global head of regional markets — would take over as CEO.
“Binance grew at an extremely fast pace globally, in a new and evolving industry that was in the early stages of regulation, and Binanace made misguided decisions along the way,” the blog said. “Today, Binance takes responsibility for this past chapter.”
Yesha Yadav, a law professor at Vanderbilt University, told Reuters that the deal “looks designed to give Binance the chance to live another day, while removing CZ, a figurehead who has been so intrinsically linked to the growth of a business model.”
Although the deal means a settlement with the justice and treasury departments, as well as with the Commodity Futures Trading Commission, Binance is not out of deep water yet. The settlement does not cover an ongoing lawsuit from the Securities and Exchange Commission that accused Binance of operating as an illegal exchange.
In response to a request for comment, Binance directed Business Insider to the company’s blog post on the settlement deal.
