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Money Laundering, Aiding Terrorist Organizations, Child Porn; Charges Levelled Against CZ & Binance

CZ and SBF
  • The United States Department of the Treasury takes legal action against Binance and its CEO, Changpeng Zhao.
  • Binance is linked to dangerous terrorist groups like ISIS, Al Qaeda, Hamas’ Al-Qassam Brigades, and the PIJ.
  • Binance predicaments should be a lesson to other financial organizations – Janet L. Yellen

Binance and its founder, Changpeng Zhao, on Tuesday pleaded guilty to charges of violating criminal anti-money-laundering guidelines,  — a big blow against the world’s largest cryptocurrency exchange. For these crimes, the company will pay a staggering fine of $4.3 billion, which is one of the largest ever levied against a corporation.

The US Department of Treasury has also highlighted all the criminal offenses of Binance, charging the exchange for its failure to report illicit transactions that occurred on its platform. 

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Charges for Money Laundering

Binance and CZ pleaded guilty to violating the Bank Secrecy Act; a requirement for financial institutions to verify the details and identities of their customers and report any suspicious activity that might be related to money laundering, tax evasion, or other crimes.

It also pleaded guilty to neglecting the registration of a money-transfer business and violating the sanctions law. This deal is the culmination of an investigation by the Justice Department that lasted three years and comes months after Binance was accused by regulators of operating an unregistered securities exchange.

Prosecutors also said Binance neglected the implementation of anti-money-laundering measures, essentially allowing the company to become a clearinghouse for illicit financial transactions. The court papers charge that between 2018 and 2022, close to $900 million in illegal financial transactions were made, violating sanctions against Iran. 

Charges for Aiding Terrorist Organizations

The Secretary of the US Treasury Janet L. Yellen said that the crypto exchange also failed to comply with US laws in their pursuit of profits, permitting illicit transactions within its platform. These transactions were linked to terrorist organizations in Iran, Iraq, Pakistan, and Palestine.

The enforcement agency further states that the exchange willfully failed to present information regarding a series of transactions made on its exchange linked to some terrorist groups such as Islamic State of Iraq (ISIS), Hamas’ Al-Qassam Brigades, Al Qaeda, and the Palestinian Islamic Jihad (PIJ).

Transactions Linked to Child Porn from Binance Exchange 

Among its long lists of charges, Binance was called out by FinCEN for its non-compliance in reporting illicit transactions involving the spread of child pornography, sexual abuse materials, and illicit sexual practices uploaded on major websites. The exchange also failed to disclose information on transactions that involve ransomware, fraud-related services, large-scale hacks, illegal narcotics, and scams. 

In response to Binance’s numerous non-compliance violations, Yellen has marked the enforcement actions against the company as a significant moment in the digital asset industry. She also uses the opportunity to give a stern warning to institutions benefiting from the United States to diligently adhere to the country’s rules and ensure citizens are safe from crimes terror threats, and other criminal activities. 

With the legal action and multibillion-dollar fine, the government is delivering a strong message well beyond Binance to the broader cryptocurrency industry. Although the government’s message is all about compliance with federal laws on financial sanctions by financial institutions, it applies to all sectors, regardless. Rules and sanctions should not be neglected by any institution serving the general public!

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