The US Treasury Department released its comments on settlements with Binance and related parties in a statement on November 21.
Treasury Secretary Janet Yellen said:
“Binance turned a blind eye to its legal obligations in the pursuit of profits. His deliberate failures allowed money to flow through his platform to terrorists, cybercriminals and child molesters… Today’s historic punishments and surveillance [agreement] …mark a milestone for the virtual currency industry.”
The Treasury Department said Binance has violated the Bank Secrecy Act (BSA) and apparently violated multiple sanctions programs. It says Binance has failed to introduce programs to prevent and report suspicious cryptocurrency transactions linked to child sexual abuse material, ransomware, money laundering, terrorism and other criminal activity.
The Treasury Department specifically named Hamas, Palestinian Islamic Jihad, Al Qaeda and ISIS as the terrorist groups that benefited from Binance’s neglect.
It added that Binance allowed US users to transact with parties in sanctioned areas, including Iran, North Korea, Syria and the Crimea region of Ukraine.
FinCEN and DOJ settlement amounts are linked
The Treasury Department and two of its subdivisions – the Office of Foreign Assets Control (OFAC) and the Financial Crimes Enforcement Network (FinCEN) – were among several US agencies that reached a resolution with Binance yesterday.
FinCEN’s settlement imposes a $3.4 billion civil penalty on Binance; the terms also require Binance to be monitored for five years, undertake compliance efforts and leave the United States. OFAC’s settlement imposes a $968 million fine and other compliance obligations, including the aforementioned FinCEN monitorship. The Treasury Department described both settlements for each subdivision as the largest in history.
Binance could also be forced to pay $150 million in additional fines if it fails to meet compliance and audit requirements.
The Department of Justice (DOJ) said separately that Binance will pay $4.3 billion to resolve its own investigation, consisting of a $2.5 billion forfeiture and a $1.8 billion criminal fine. It said it would credit $1.8 billion toward the various Treasury Department settlements and another $150 million settlement with the CFTC.
The DOJ is responsible for the criminal aspects of the Binance case. While Binance itself will seemingly face no further prosecution, former CEO Changpeng Zhao faces up to 18 months in prison and will be sentenced in February 2024.