Binance Nearing Agreement to Remove Compliance Monitor Requirement
Binance, one of the leading cryptocurrency exchanges, is reportedly in talks with federal prosecutors to eliminate the need for an outside compliance monitor as part of its $4.3 billion money laundering settlement. This potential agreement comes amidst a broader policy shift under the Trump administration, as reported by Bloomberg News on Sept. 16.
The Department of Justice (DOJ) is considering removing the oversight mechanism, a requirement that was put in place as part of the settlement with Binance. This shift in stance has seen the elimination of several corporate monitors appointed during the previous administration. While federal prosecutors have discussed the three-year monitorship requirement with Binance, a final decision has not yet been reached.
In 2023, Binance agreed to pay one of the largest corporate penalties in US history to resolve allegations of failing to prevent money laundering on its platform. As part of the settlement, Binance founder Changpeng Zhao served a four-month prison sentence and even sought a presidential pardon from Trump.
The DOJ has been reviewing its corporate monitor policy, with Matthew Galeotti, head of the DOJ’s Criminal Division, issuing guidance earlier this year questioning the effectiveness of mandatory corporate oversight. The department’s memo highlighted that while monitors play a role in preventing repeat violations, they can also be costly and disrupt lawful business operations.
Several companies that accepted monitors under Biden administration settlements have seen their oversight requirements terminated. For example, Glencore Plc units incurred $142 million in monitoring costs before prosecutors ended their oversight. Similarly, NatWest Group Plc and Navy contractor Austal USA agreed to enhanced compliance reporting as alternatives to monitor requirements.
Binance is likely to face similar enhanced reporting obligations before prosecutors approve the removal of the monitor. The exchange has been linked to the Trump family’s business ventures, with some reports suggesting its involvement in the development of World Liberty Financial’s stablecoin USD1, although Binance has denied these allegations.
Under the current administration, the Securities and Exchange Commission has dropped or paused multiple investigations into crypto companies, including Binance. Binance currently maintains two separate monitors from its DOJ settlement and Treasury Department agreement with FinCEN, with the Treasury monitor remaining active as prosecutors consider the removal of the DOJ oversight requirement.
As negotiations continue between Binance and federal prosecutors, the outcome of these talks will have significant implications for the future compliance and regulatory oversight of the cryptocurrency exchange. Stay tuned for updates on this developing story.
Mentioned in this article: Binance, Department of Justice, Glencore Plc, NatWest Group Plc, Austal USA, Securities and Exchange Commission, FinCEN.