Binance ‘Likely’ to Pay Fines in US Over Regulatory Probes: WSJ

The world’s largest crypto exchange has been under investigation from several major US regulators relating to its US affiliate, Binance.US

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Source: Shutterstock / salarko, modified by Blockworks

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Binance is expecting to pay fines related to its business in the US following investigations by regulators over affiliations with two trading firms and its CEO Changpeng Zhao.

A Securities and Exchange Commission probe is seeking to determine the relationship between Zhao, Sigma Chain AG and Merit Peak — two market makers acting on behalf of Binance’s US affiliate. 

Speaking with the Wall Street Journal on Wednesday, Binance’s chief strategy officer, Patrick Hillmann, said the exchange is working with regulators to determine the appropriate remedial measures necessary to make amends.

The outcome of these discussions will “likely” result in a financial penalty, with the possibility of further action to be determined by the regulatory authorities, Hillman said, without expanding on the size of the potential penalties.

As a key focus area, regulators are scrutinizing Binance.US over its disclosure to clients with regard to its connection to the firms, according to a separate WSJ report on Wednesday.

A spokesperson for the exchange declined to comment on its conversations with regulators.

The Justice Department has also been investigating Binance over possible violations of the US’ Bank Secrecy Act since at least September of last year.

The department’s money laundering unit previously requested the exchange provide communications from Zhao and other top executives resulting from issues including identifying illicit transactions and attracting US-based customers.

The Commodity and Futures Trading Commission (CFTC) too has been probing Binance’s global exchange over allegedly allowing US nationals to trade on its platform since March 2021.

Hillman, pointing to recent regulatory actions in the US, said the current climate surrounding digital assets remains “confusing” though he said he feels confident about where the discussions with regulators are headed.

Last week, the SEC hit Kraken with two charges related to its staking products, with the exchange agreeing to settle for $30 million.

The move immediately drew condemnation from the community, including SEC Commissioner Hester Peirce, who’ve long called out the agency’s attempts to bypass Congress as “regulation by enforcement.”


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