Crypto exchange Binance could face U.S. Department of Justice fraud charges, though prosecutors are weighing alternatives given the risk of an FTX-style bank run, Semafor reported, citing people familiar with the matter.
U.S. officials are worried an indictment could imperil the broader cryptocurrency industry, according to Semafor. For that reason, they are weighing alternatives such as "fines and deferred or non-prosecution agreements," sources told the publication.
Binance declined to comment. The Justice Department didn't immediately respond to CoinDesk's request for comment.
It was already publicly known U.S. officials were scrutinizing Binance. Earlier this year, the Commodity Futures Trading Commission (CFTC) sued the company and founder and CEO Changpeng "CZ" Zhao for "willful evasion" of U.S. laws.
But the pain caused by last year's collapse of Sam Bankman-Fried's FTX, as well as the long history in traditional finance of failed firms – like Lehman Brothers in 2008 – dragging down the rest of the industry, show the risk of going after a systemically important institution. Binance is the largest crypto exchange in the world.
FTX's demise erased billions of dollars in value from crypto markets, tarnished the industry's image and pushed the large lending business of Genesis (which, like CoinDesk, is owned by Digital Currency Group) into bankruptcy court.
UPDATE (Aug. 2, 2023, 18:02 UTC): Adds context.
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