The US Justice Department seeks $US4 billion from Binance to end a years-long investigation into the world’s largest cryptocurrency exchange, according to Bloomberg. Negotiations are reportedly underway that could subject Binance co-founder and CEO Changpeng Zhao (aka CZ) to criminal charges in the US.
Bloomberg cites “people familiar with the discussions” as saying that the Justice Department alleges money laundering, bank fraud, and sanctions violations in an ongoing investigation against Binance. The agreement would allow Binance to continue operating in the US and avoid a major fallout for markets and crypto holders, while also delivering a meaningful blow to Binance. If the terms are agreed upon, it would be one of the largest settlements in crypto history.
Binance and the Justice Department did not immediately return Gizmodo’s request for comment.
The Justice Department is hoping for another major win in regulating crypto exchanges, shortly after convicting Sam Bankman-Fried of fraud and conspiracy charges at FTX this month. This settlement, if agreed upon, would place another founder in the hot seat, Zhau, but would theoretically avoid the market disruption of yet another failing crypto exchange.
Unlike SBF, Zhao currently resides in the United Arab Emirates, where there is no extradition treaty, so he would only face criminal charges if he returned to American soil or one of the many countries that have agreements with the US. That being said, the UAE signed a deal to cooperate around cybercrime with the US in 2022, but it’s unclear whether that would apply here.
According to Bloomberg:
Binance has sought to minimize its exposure in any settlement, including pushing for a deferred prosecution agreement, another person said.
If Binance and the DOJ agree on a deferred-prosecution-agreement, the Justice Department would file a criminal complaint against the company. The US would not go forward with a prosecution as long as the company meets prescribed conditions, which usually include paying a substantial penalty and agreeing to a detailed statement of facts outlining its wrongdoing. A process would be set up to monitor the company’s compliance.
Binance has fiercely opposed US regulation, calling a lawsuit from US regulators “incendiary” last month. Changpeng Zhao’s crypto exchange emphasized in a court filing that “U.S. law governs domestically but does not control the world. Congress did not make the CFTC the world’s derivatives police.”
The price of Bitcoin sits above $US37,000 on Monday, pushed up by news of the potential Binance settlement. However, the price is also pushed up by new “anarcho-capitalist” Argentine President Javier Milei, who was elected this weekend and has a strong preference for Bitcoin and distrust of central banks.