Regulatory Scrutiny on Binance in the US Intensifies with Potential Fines Looming
Binance is anticipating the payment of fines in the US due to inquiries by regulators regarding its associations with two trading firms and CEO Changpeng Zhao.
The Securities and Exchange Commission is investigating the links between Zhao, Merit Peak, and Sigma Chain AG, two market makers working on behalf of Binance’s US affiliate.
Binance’s Chief Strategy Officer, Patrick Hillmann, stated that the company collaborates with regulators to decide the necessary remedial steps to rectify the situation.
Hillman acknowledged that the consequence of these negotiations would probably be a monetary penalty, and regulatory authorities may decide on further action.
The regulators examine Binance.US’s disclosure to customers regarding its affiliation with the trading firms. Binance representatives did not comment immediately on the matter.
Moreover, the Justice Department has been investigating possible violations of the US Bank Secrecy Act by Binance since September of last year. The department’s anti-money laundering unit previously requested that the exchange disclose communications from Zhao and other top executives concerning issues such as identifying fraudulent transactions and drawing US-based customers.
Hillman acknowledged that the current situation regarding digital assets and regulatory activities in the US is “puzzling,” but he is optimistic about the direction of the discussions with regulators.
Last week, the SEC accused Kraken of two charges concerning its staking products, and the exchange agreed to pay $30 million in settlement.
This move received criticism from SEC Commissioner Hester Peirce and others, who have long opposed the agency’s attempts to sidestep Congress as “enforcement regulation.”