The crypto community reacts to Binance’s $4 billion penalty

In this post:

  • According to a Nov. 20 Bloomberg report, the US Justice Department is negotiating with Binance to end its probe against the firm – There’s a $4 billion deal on the table.
  • The talks between the DOJ and Binance raise the prospect of Changpeng Zhao ‘CZ’ facing criminal charges in the US as part of an agreement to end the investigation into alleged money laundering, bank fraud, and sanctions violations.
  • Galaxy CEO Mike Novogratz is optimistic about a Binance settlement.  His position emphasizes the potential for this settlement to change cryptocurrency regulation, particularly regulatory clarity.

As part of a potential resolution to a years-long investigation into the world’s largest cryptocurrency exchange, the US Justice Department is demanding more than $4 billion from Binance Holdings Ltd.

According to people familiar with the discussions, the Justice Department and Binance are negotiating the possibility of its founder, Changpeng Zhao, facing criminal charges in the United States as part of an agreement to resolve the investigation into alleged money laundering, bank fraud, and sanctions violations.

CZ is currently staying in the United Arab Emirates, which does not have an extradition treaty with the United States, although this does not prohibit him from willingly surrendering to the US authorities.

Binance is in for a $4 billion penalty

The criminal division’s money laundering and asset recovery section, in collaboration with the national security division and the US attorney’s office in Seattle, has been leading the investigation into Binance.

According to the source, Binance is seeking a “deferred prosecution agreement.” Under the terms of this agreement, the Justice Department will file a criminal complaint but will not prosecute the corporation if three requirements are met.

Binance would first have to pay $4 billion in fines. Second, it would have to publish a thorough document admitting areas where it violated the law. Third, a monitoring process would be established to ensure Binance’s future compliance with laws and regulations, and the business would be required to follow this approach.

Many in the crypto community question the legitimacy of the report by Bloomberg. CZ sued a Bloomberg affiliate in 2022 for allegedly publishing fake news, saying he ran a Ponzi scheme.

What the crypto community has to say

While the penalty is one of the largest ever imposed by the US government on a firm, traders and analysts are breathing a sigh of relief for the broader market. There are still unanswered questions, such as what concessions the government will demand of Binance and its leader, but the report provides some clarity that there is a way forward for Binance.

This market reaction suggests that the DOJ’s decision does not pose a systemic risk to the entire sector.

Mike Novogratz, the CEO of Galaxy and an investor and cryptocurrency advocate, has voiced optimism about the likely settlement between Binance.  His viewpoint highlights the potential for this settlement to be a watershed moment in the cryptocurrency industry, particularly in terms of regulatory certainty.

A decision might provide much-needed regulatory clarification, setting a precedent for how other crypto businesses might deal with similar issues. Because regulatory uncertainty has been a substantial obstacle to mainstream acceptance, this clarification is critical for the industry’s stability and growth.

Novogratz’s remarks reflect a broader mood within the cryptocurrency community. There is agreement that overcoming these legal difficulties could remove fears and uncertainties (FUD) surrounding the industry.

One user on X sarcastically opined on the move by the DOJ against the exchange and stated: “Is the SEC broke? They just offered a 4 Billion settlement number to Binance, and just tonight, they decided to sue Kraken. Man, Gary is protecting us so hard. Great timing, Gary. Where were you when you were supposed to actually do your job? You & Cramer should start a hedge fund.”

One question remains – If CZ and Binance.US decide to settle with the DOJ, will that solve regularity clarity and the future of the exchange? Many worry that what happened with Kraken today will repeat with Binance. Kraken settled for $30 Million earlier this year, and the SEC has gone after the exchange for other ‘crimes.’

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decision.

Share link:

Most read

Loading Most Read articles...

Stay on top of crypto news, get daily updates in your inbox

Related News

Bitcoin Depot announces the creation of new Bitcoin (BTC) treasury (1)
Subscribe to CryptoPolitan