Binance ‘willfully failed’ to report over 100k transactions linked to fraud and scams, U.S. Treasury says

The government says Binance has agreed to look back and report to FinCEN about the suspicious transactions which it had failed to report.

Cryptocurrency exchange Binance “willfully failed” to report to regulators more than 100,000 transactions on its platform tied to illicit activity such as darknet, scams, fraud and other malicious activity.

In a press release published on Nov. 21, the U.S. Treasury said that Binance also failed to implement an effective anti-money laundering program and failed to perform know-your-customer (KYC) regulations, required under U.S. law, on a “large number of its users.”

“This meant that Binance allowed a range of illicit actors to transact freely on the platform, damaging the integrity of the financial system.”

U.S. Department of the Treasury

Moreover, the Treasury noted that Binance also failed to mitigate risks related to “anonymity-enhanced cryptocurrencies,” allowing its users to “obscure information about the origin and destination of transactions.” The government also revealed that Binance’s ex-Chief Compliance Officer told personnel that Binance founder and ex-CEO Changpeng Zhao made a separate policy to “not report such activity.”

In early 2022, Reuters issued a special report noting that Binance “acted against its own compliance department’s assessment” by offering services to customers in countries, including Russia and Ukraine, judged to be of “extreme” money-laundering risk.

At the time, Reuters also revealed that Binance’s ex-Chief Compliance Officer Samuel Lim raised concerns about the weak KYC system. Former executives at Binance reportedly warned Zhao about issues with KYC, but the Binance founder ignored them.

Reuters has repeatedly targeted Binance and its ex-CEO thorough 2022 with a series of special reports, shedding light on the exchange’s close relationship with Russia’s state security service as well as its plan to dodge U.S. and U.K. regulators.

Zhao constantly denied the allegations, saying that journalists were “inaccurate” as they “ignore facts, take words out of context, re-use 3 year old ‘news’ (that was/is inaccurate).”

On Nov. 21, 2023, Binance’s Zhao stepped down as CEO and pleaded guilty to violating U.S. anti-money-laundering requirements, writing on X that he had “made mistakes” and now “must take responsibility.”

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