Binance settles with U.S. government: Timeline of US enforcement actions
Binance and its founder Changpeng"CZ" Zhao has admitted to violating United States laws around money laundering and terror financing — agreeing to pay $4.3 billion in fines.
The Justice Department's probe into Binance started years earlier, and in the meantime, other U.S. regulatory agencies launched their own actions against the crypto exchange.
Here's what happened.
Feb. 15: Binance was under suspicion since 2018
Reports emerged that Binance is the target of several United States law enforcement investigations — some dating back to 2018.
March 1: Congress involved — Elizabeth Warren leads the charge
Binance came under U.S. Congress scrutiny on March 1 as Senators Elizabeth Warren, Chris Van Hollen and Roger Marshall sent a letter to Binance CEO Changpeng “CZ” Zhao and Binance.US CEO Brian Shroder requesting answers to several allegations and the companies’ balance sheets. The Senators were not satisfied with the responses and the executives were later accused of lying .
Sen. Warren and company's letter to CZ. Source: Office of Sen. Elizabeth WarrenMarch 27: CFTC strikes with 7 charges
The Commodity Futures Trading Commission (CFTC) filed suit against Zhao, chief compliance officer Samuel Lim and Binance , naming seven counts of trading irregularities and market manipulation. The CFTC investigation reportedly began in 2021 . Zhao vehemently denied the charges .
May 5: DOJ also has eyes on Binance
Bloomberg reported that Binance is under investigation by the Justice Department for violations of sanctions against Russia. Binance maintained a presence in Russia through September.
The Justice Department is investigating whether Binance was used illegally to let Russians skirt US sanctions and move money through the world’s biggest cryptocurrency exchange https://t.co/AVgG55iSmx
— Bloomberg Crypto (@crypto) May 5, 2023
June 5: SEC strikes with 13 charges
The Securities and Exchange Commission filed suit against Binance, Binance.US and Zhao on June 5 with 13 charges, including unregistered securities sales, allowing U.S. customers to use the Binance exchange, intermingling customer and corporate funds and wash sales.
The SEC suit against Binance, Binance.US and CZ. Source: Court ListenerThe SEC got an emergency restraining order against Binance.US and the exchange drastically cut back its U.S. activities .
July 6: Binance leadership exodus starts
Four senior members of the Binance.US team left the company, starting a wave of departures that continued for months .
Aug. 2: DOJ mulls move on Binance
The Justice Department was reported to be considering fraud charges against Binance. To avoid a run on the exchange, the department was leaning toward fines or non-prosecution agreements at that time.
Aug. 14: Binance.US scrambles to block SEC
Binance.US sought a protective order against the SEC , accusing the SEC of launching a “fishing expedition” in its discovery process. Binance insisted it was acting in good faith in the process.
Binance is seeking a protective order against the SEC, claiming that they are conducting a "fishing expedition". https://t.co/NquMV8ShNK
— Molly White (@molly0xFFF) August 15, 2023
Sept. 13-14: Binance.US cuts staff, CEO quits and SEC responds
Binance.US laid off a third of its workforce — about 100 people and its CEO Brian Shroder also departed. The SEC complained to the court about a lack of cooperation from Binance in its discovery process.
Sept. 19: Binance.US notches minor win against SEC
Binance.US scored a minor victory when the court denied the SEC access to the exchange’s software. Instead, the judge suggested that the SEC should be more specific in its discovery requests.
Sept. 21: Binance wants SEC suit tossed
Zhao, Binance and Binance.US asked the court to dismiss the SEC case against them. They claimed the SEC misinterpreted securities law and was imposing its authority retroactively. The SEC retorted that Binance had a “tortured interpretation of the law.”
Oct. 23: Binance wants CFTC suit tossed
Binance filed a motion to dismiss the CFTC’s suit. If the CFTC prevailed, it “would allow it to regulate any activity in cryptocurrency [...] related to a derivatives product” worldwide, Binance said. “Congress did not make the CFTC the world’s derivatives police, and the Court should reject the agency’s effort to expand its territorial reach beyond what is permitted by the law,” the exchange added.
Oct. 26: CZ’s wealth drops, Congress wants DOJ to strike
The Bloomberg Billionaires Index dropped Zhao from 11th place among the richest people in the world to a somewhat more modest 95th. His personal wealth was said to have been reduced from $96.9 billion to $17.3 billion. His standing had risen to 68th place in the November list, however.
CZ in 68th place on the November Bloomberg Billionaires Index. Source: BloombergThe same day, Senator Cynthia Lummis and Representative French Hill called on the Justice Department to move against Binance and Tether for enabling sanctions evasion. This was two weeks after Binance froze accounts linked to Hamas .
Nov. 21: CZ and Binance indicted
The government filed indictments against Binance and Zhao in Washington state on Nov. 14. The documents were unsealed on Nov. 21 . Zhao steps away from Binance as part of the deal.
Nov. 14 charges against Binance, unsealed Nov. 21. Source: CourtListenerPenalties totaled over $4 billion, including fines imposed on Zhao and Lim personally.
We’re pleased to share we’ve reached resolution with several US agencies related to their investigations.
— Binance (@binance) November 21, 2023
This allows us to turn the page on a challenging yet transformative chapter of learning that has helped us become stronger, safer, and an even more secure platform.
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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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