Decrypt’s Art, Fashion, and Entertainment Hub.
As the regulatory scrutiny of the crypto sector in the U.S. intensifies,hopes to eventually settle existing probes into its business.
According to chief strategy officer Patrick Hillmann, the software engineers who helped the exchange to grow were mostly unfamiliar with laws and rules surrounding bribery, corruption, and money laundering.
This led to gaps in Binance's compliance efforts, which the firm is now seeking to fill by “working with regulators to figure out what are the remediations we have to go through,” Hillmann said in an interview with the Wall Street Journal.
According to him, this will likely result in fines, however, the price to pay could be higher.
“We just don’t know. That is for regulators to decide,” said Hillmann, adding that the exchange is still “highly confident and feeling really good about where those discussions are going.”
Binance under US investigations
Binance has had a long history of U.S. regulatory troubles.
The exchange has never registered itself in the country, which first led to the New York Attorney General’s office referring the firm to the New York State Department of Financial Services for potential violation of New York’s virtual currency regulations in 2018. In March 2021, the Commodity Futures Trading Commission (CFTC) opened a probe, looking into whether the exchange illegally allowed U.S. residents to use the service.
The CFTC reportedly launched a separate probe into Binance over claims of insider trading in September 2021, predated by another investigation by the Department of Justice (DOJ) and the Internal Revenue Service.
Binance faced more regulatory pressure following the FTX collapse last year as the DOJ was reportedly considering filing criminal charges against the exchange and some of its executives, including CEO Changpeng "CZ" Zhao.
The potential charges relate to an investigation that was launched in 2018 focusing on Binance's compliance with anti-money laundering laws and sanctions.
According to Hillmann, while it’s hard to estimate the size of fines or when the exchange might reach a possible resolution, “it will be a good moment for our company because it allows us to put it behind us.”
There was more trouble for Binance earlier this week as the NYDFS ordered Paxos, the issuer of the Binance USD (BUSD) stablecoin, to stop minting BUSD and "end its relationship" with the crypto exchange.