DOJ unveils extensive monitorship over Binance operations



Binance compliance commitments with the United States Department of Justice (DOJ) were unsealed on Dec. 8, revealing a significant government oversight of the crypto exchange operation and business activities.

In an analysis shared on X (formerly Twitter), John Reed Stark, a former Securities and Exchange Commission (SEC) official, classified the “exhaustive list” of Binance’s new compliance commitments as a “consulting firm’s wish list” that will likely shut down the platform.

Binance’s new obligations are described in an 11-page document and include cooperation to grant authorities access to documents, records and resources at their request, including access to information related to its “former employees, agents, intermediaries, consultants, representatives, distributors, licenses, contractors, suppliers, and joint venture partners,” noted Stark.

Several sections of the DOJ’s criminal division will closely monitor the exchange’s activities, including the section for money laundering and asset recovery; the section for national security; the section for counterintelligence and export control; and the office for the Western District of Washington’s United States Attorney.

Previously disclosed, Binance’s plea deal with the U.S. government also includes five years of oversight by the Financial Crimes Enforcement Network (FinCEN). The unprecedented oversight of its activities will likely cost the exchange millions of dollars. According to Stark:

“Binance’s settlement requires it to offer years of instantaneous access, audit, examination and inspection to DOJ, FinCEN and all types of financial regulators and law enforcement, exposing the company — and its customers — to a 24/7, 365-days-a-year financial colonoscopy.” 

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Binance and its former CEO, Changpeng “CZ” Zhao, have admitted to violating U.S. laws around money laundering and terror financing, agreeing to pay $4.3 billion in fines on Nov 21.

SEC points to DOJ evidence to back up case against Binance

Binance’s recently unsealed ​​court records are part of a new filing by the U.S. SEC, incorporating DOJ’s enforcement actions and settlements to strengthen its case against the exchange and Zhao. 

The SEC pressed 13 charges against Binance on June 5, accusing the exchange of unregistered offers and sales of the BNB (BNB) and Binance USD (BUSD) tokens, the Simple Earn and BNB Vault products, and its staking program. The SEC also alleges that Binance failed to register its Binance.com platform as an exchange or broker-dealer clearing agency.

With its latest filing, the regulator is asking the court to take a “judicial notice” of the facts presented in Binance’s settlement. “Which means that the SEC wants the Judge to declare a fact presented as evidence as true without a formal presentation of evidence,” said Stark.

The SEC is using the settlement to challenge Binance’s latest motion to dismiss the case, undermining the exchange’s arguments about its presence and operations in the U.S. over the past years.

Binance had more than three million U.S. customers by March 2018, according to its settlement with the DOJ. Approximately 30% of Binance’s web traffic was originating from the United States as of June 2019.

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