6 Facts About the Binance Saga Simplified & Summarised for You

If you’ve ever found the world of cryptocurrency boring and only catered for finance bros, this week’s headlines will make you feel like you’re tuning in to an episode of a crypto-themed reality TV series.

In a dramatic turn of events in the cryptocurrency world, the founder and CEO of Binance, one of the largest cryptocurrency exchanges in the world, has pleaded guilty to charges of violating anti-money laundering laws. 

This startling development marks the start of the ongoing saga of Binance. 

If you’re not caught up with the saga, here are six facts simplified and summarised for you.

What is Binance?

Binance is a digital marketplace where people buy, sell, and trade cryptocurrencies and virtual tokens. 

Imagine it as an online exchange, similar to a stock market, but for digital currencies instead of stocks. 

Users can trade various types of cryptocurrencies, such as Bitcoin, Ethereum, and many others, using Binance’s platform. 

Binance Founder and CEO Admits Guilt in Money Laundering Case

On Tuesday (21 November 2023), Zhao Changpeng, the CEO of Binance, pleaded guilty to breaking US money laundering laws. 

As part of a deal, Binance, the world’s largest cryptocurrency exchange, which he founded, will pay a massive fine of US$4.3 billion settlement for regulatory violations. 

This settles a lengthy investigation into the company’s activities.

Attorney General Merrick Garland stated that Binance, the world’s biggest cryptocurrency exchange, grew so large partly because it was involved in illegal activities. 

As a result, the company now faces one of the largest fines ever given to a corporation in US history.

Consequently, Zhao has resigned from his position as CEO.

Attorney General Garland mentioned that Zhao entered his plea in person in the United States.

According to court documents, Zhao has agreed to pay a substantial fine of US$50 million as part of the plea deal.

Binance has reached agreements with the Treasury Department’s agencies, resulting in a civil money penalty of US$3.4 billion and a separate penalty of US$968 million involving the Office of Foreign Assets Control (OFAC). 

These settlements mark historic milestones for the agencies in terms of their financial impact and consequences.

Alleged Involvement in Suspicious Transactions: From Terrorists to Cybercriminals and Child Abusers

Treasury Secretary Janet Yellen said Binance was driven by profit and knowingly disregarded its legal responsibilities.

It has facilitated the transfer of funds to terrorists, cybercriminals, and individuals involved in child exploitation via its platform.

Yellen highlighted that Binance actively undermined its sanctions monitoring mechanisms, permitting over 1.5 million virtual currency trades that violated US sanctions while failing to report suspicious transactions.

Over 100,000 suspicious transactions, including dealings with organisations that the United States has designated as terrorist groups, such as the Palestinian militant organisation Hamas, were unreported by Binance. 

Additionally, it neglected to report transactions involving websites dedicated to the sale of child sexual abuse materials.

They also failed to stop or report transactions involving groups like the Islamic State of Iraq and Syria and users in sanctioned places like Iran and North Korea.

Binance Slapped with Heavy Penalties and a Five-Year Supervision Period

As the probe is still underway, Binance has been imposed with a five-year supervision period from authorities.

This means that in the future, Binance must report suspicious activities as required by law and review past transactions to report any such activities to the authorities. 

This will help the authorities in their criminal investigations related to cybercrime and terrorism financing, including instances where cryptocurrency exchanges are used to support groups like Hamas.

Former Chief Compliance Officer Faces Charges Related to Binance Activities

Regarding Binance’s former chief compliance officer, Samuel Lim, a Singaporean, faced charges by the Commodity Futures Trading Commission (CFTC), as reported by the agency. 

According to CNA, Lim and his lawyers did not respond to requests for comment.

The CFTC stated that Lim has agreed to a US$1.5 million settlement, pending court approval.

The CFTC mentioned that, in February 2019, Lim received information about transactions involving the militant Palestinian group Hamas on the Binance platform.

According to the CFTC’s March lawsuit, Lim “explained to a colleague that terrorists usually send ‘small sums’ as ‘large sums constitute money laundering”.

Richard Teng Assumes Role of Binance’s New CEO Amidst Legal Troubles

As Zhao stepped down as the CEO of Binance, Richard Teng, a Singaporean, took over the role of CEO for Binance. 

Notably, he held the position of Singapore CEO for only five months, according to his LinkedIn profile, before being promoted to Regional Head for Europe, Asia, the Middle East, and North Africa in April 2023.

Before joining Binance, Mr Teng had a background in traditional finance and regulatory roles, including serving as the Director of Corporate Finance at the Monetary Authority of Singapore (MAS) and as the Chief Regulatory Officer of the Singapore Exchange (SGX).

As the new CEO of Binance, Mr Teng’s primary focus is to instil confidence in users regarding the company’s financial stability, security, and safety. 

He expressed his commitment to collaborating with regulators to establish high global standards that promote innovation while ensuring consumer protection. Additionally, he aims to work closely with partners to drive growth and adoption in Web3.