Feb 16, 2023

As U.S. regulators continue to sniff around Binance, the world’s largest crypto exchange is prepared to pay monetary penalties to “make amends” for past regulatory violations, according to The Wall Street Journal.

Video transcript

The state of crypto is presented by Tron connecting the world to the power of Cryptocurrency. All right, B is bracing itself to pay monetary penalties to quote, make amends end quote for past regulatory violations according to the Wall Street Journal. Well, joining us now to discuss is Coindesk global policy and regulation managing editor Nick Day, who is also the editor of Coin de State of crypto newsletter. It's the thing that everyone is reading right now. It is the hottest newsletter out there in Crypto. Nick. Well, it seems like since uh since, since uh all these exchanges have been uh been uh you know, under the watchful eye of regulators since the collapse, particularly of FTX. Um So Patrick Hillman did an interview with the journal and what did he say? Hey, good morning. Yeah. So uh Binance is apparently uh preparing to pay a massive penalty to regulators. He didn't say, you know which regulators specifically, but we know that Binance has been under investigation, for example, from uh the US Department of Justice looking into money laundering allegations and we've seen reports that, you know, Binance has been used in the past by individuals and sanction nations and, you know, other things that, uh, would draw regulators ire. So, um, you know, we don't know at this point just which regulator or what the penalties would actually look like. But we know that there are a number of investigations and probes into the exchange. So the idea that, you know, this is coming to a conclusion is maybe not a surprise. What is, does indicate is that, you know, if it's a fine in a settlement, then I guess regulators might be, you know, the signal here might be that regulators are becoming comfortable with where Binance is now. Right? They're not bringing in enforcement action or shutting down Binance or, you know, I guess, uh, you know, it's possible that a Binance spokesperson wouldn't want to admit as such, uh, ahead of that if that was the case. But regardless this is an interesting, you know, statement coming out ahead of any action. Yeah, I, I, it seemed interesting because he was saying basically like, oh, you know, we kind of grew too fast to keep track of, of regulation that, you know, that, I guess in the past five years since, uh, they started being under, uh, some sort of investigation, they didn't have enough time to clean up what was going on, but they certainly had time to acquire other companies start other companies, uh, create a whole pegged, uh, stable coin, things like that. Um, so I guess they, they just didn't have enough time and, and resources. That kind of what he's saying. Gosh. Yeah. And, you know, this is not something like new per se. We've heard this from other, uh, crypto companies before, you know, this whole, you know, move fast break things ethos. A lot of companies started up, you know, their businesses and they just kind of sought to grow and then eventually they realized like, 00, we should probably have like a compliance department or something like that. Um, finance in particular, we've seen them hire a number of former regulators in the last couple of years. Um, presumably that was to a help, advise them on, you know, what they should do, but also b to help them connect with the actual entities investigating them or that could investigate them. And, um, you know, it, it makes sense that after, you know, all of that, that Binance might be moving to a place where it's more compliant with some of these, uh, you know, regulations in the various countries that it operates in. Um, but again, the fact that we don't know yet which regulators or which investigations might be coming to a settlement soon. I means there's still, you know, a lot of unanswered questions about just what this posture actually is. They missed a chance to blame the regulators, didn't they? They could have just said, oh, well, you know, you guys aren't clear on who regulates this. What could we do missed opportunity. Well, meanwhile, Reuters also reporting that finance has been under investigation by the US Attorneys General Office, uh, for the western district of Washington since at least 2018. Uh, is there going to be a potential settlement there? That seems to be the implication. But, you know, again, there have been a number of investigations into Binance that have been reported on over the years. So, uh, without more information, it's really hard to say just which entity Binance might settle with or if it's going to be, you know, a multi entity settlement. Um, you know, just we don't have enough information at this point, any estimate on the size of the fines or timeline for, uh, when the investigation might be settled. If Binance is willing to say that they're close to a settlement, then, you know, it suggests it's gonna be soon the next couple of months rather than years. Um Beyond that, I don't think we have enough information to say, you know, what the size might be or, um, and again, like that's gonna depend in part on, you know, just what the actual settlement looks like. Is this just a DOJ settlement in which case? Ok. It might be only so much. Are they also settling with, for example, the SCC or the CF DC over any charges, uh, you know, tied to investigations, then that'll be a slightly bigger settlement. Are there state entities involved? There's just a number of questions about the, you know, actual details of this potential settlement that we really don't have at this point.

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