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Compliance Issues Raised Against Binance, Might Face Heavy Fines

Patrick Hillmann, the chief strategy officer of the corporation, says that Binance has been working in partnership with the authorities to fix certain compliance concerns that had been raised in the past.

Photo by Kanchanara / Unsplash

Following the conclusion of an investigation into the company's operations in the United States, the largest cryptocurrency exchange in the world, Binance, is making preparations to settle financial penalties and pay substantial fines (1).

Patrick Hillmann, the chief strategy officer of the corporation, was quoted in a report dated the 15th of February as saying that the organization has been working in partnership with the authorities to fix certain compliance concerns that had been raised in the past.

Hillmann asserted that Binance was working hard with the regulating body to solve some of the problems that had occurred in the past and to make reparations.

He also stated that the outcome of the investigations would ultimately result in sanctions being issued against the company. However, he concluded his comments by stating that this could be up to the authorities to determine.

Since Binance has been the subject of multiple investigations in the United States, including the one initiated in 2018 by the Department of Justice regarding possible breaches of anti-money laundering laws, the company may be required to pay significant fines. These investigations stem from allegations that Binance may have broken laws prohibiting money laundering.

The Commodity Futures Trading Commission investigated the company in March 2021 to determine whether or not it had authorized the provision of cryptocurrency derivatives to clients in the United States.

In February this year, the Securities and Exchange Commission initiated an inquiry into the trading entities connected to Binance's Chief Executive Officer Changpeng Zhao. This probe focused on Binance's US division.

Hillmann also stated that Binance was extremely confident in the course the conversation was taking. Still, the company could not estimate the amount of compensation or the timescale meant to be filled for resolutions with US regulators.

He also asserted that the lack of information and the haziness of the legislation in the United States at the time made it incredibly difficult for cryptocurrency companies.

Binance VS Regulators

Binance, on the other hand, engaged in a public dispute when news outlets highlighted the company's fight with the authorities over failings in compliance in December of the previous year.

Binance argued that all of the articles were false. Even further, the CEO of Binance stated that the news organizations were still working for FTX's founder, Sam Bankman-Friend.

The change in posture is a response to the fact that it has recently become well-known that the company is going through some difficult times. The Securities and Exchange Commission has informed Paxos.

This company is responsible for rolling out the BUSD stablecoin for Binance and intends to take stringent action against the popular cryptocurrency exchange because of such issuance.

In recent months, the SEC has been increasing its oversight of the crypto business and targets particular staking services and stablecoins.

Paxos was hit with a crackdown earlier in the week by a regulatory authority in New York, which forbade the company from releasing any more of the Binance-branded stablecoin BUSD.

Following the SEC's enforcement action, a different cryptocurrency exchange known as Kraken was also required to pay a fee of $30 million and stopped providing its staking services.