As a seasoned crypto investor with a knack for navigating the stormy seas of digital finance, I find myself both encouraged and skeptical by Binance’s recent moves to beef up its compliance efforts. With over two decades of experience in traditional finance and regulatory compliance, it’s heartening to see a major player like Binance taking these steps seriously.
Binance is intensifying its efforts worldwide to enhance its compliance structure. As reported by Bloomberg, this leading cryptocurrency exchange intends to significantly increase its workforce, with the goal of recruiting approximately 1,000 new employees by the end of 2024. Remarkably, around 200 of these positions will focus specifically on fortifying their compliance department.
According to recent findings, Binance intends to invest more than $200 million during this year for adhering to regulatory requirements. This decision follows Binance’s ongoing efforts to address various compliance issues in numerous nations.
Legal Troubles
Binance, a prominent cryptocurrency exchange, has encountered substantial legal difficulties in the U.S., including being accused by authorities for not preventing illegal activities on its platform. In 2023, it reached a plea deal with the Department of Justice (DOJ), agreeing to pay a massive $4.3 billion fine. However, Binance continues to fight another legal battle with the U.S. Securities and Exchange Commission (SEC), as they allege that Binance has been offering unregistered financial securities.
To tackle these issues head-on, Binance enlisted the help of two auditing firms, Forensic Risk Alliance and Sullivan & Cromwell, for an extensive review of their financial records and transaction monitoring systems.
It’s important to note that the regulatory concerns surrounding this exchange aren’t limited to the U.S. Last year, Brazil alleged that Binance was involved in an illegal pyramid scheme. Earlier in 2020, Brazil’s securities watchdog barred Binance from offering derivative products. However, the platform has agreed to a $1.75 million settlement with the regulator following these allegations.
As a long-time cryptocurrency trader, I’ve witnessed the ever-evolving landscape of digital assets and their regulatory environment. Recently, Binance, one of the biggest players in this space, has been making headlines due to its compliance issues across various regions. Earlier this month, Binance settled a $2.25 million penalty with India’s Financial Intelligence Unit, allowing them to resume operations there after a brief hiatus.
Binance’s Compliance Efforts
At present, Binance’s team dedicated to upholding platform security against illegal activities like money laundering, fraud, and funding terrorist organizations counts approximately 500 members. In the year 2023, they handled more than 58,000 requests from law enforcement agencies, collaborating closely with authorities in their mission to curb financial misconduct. Notably, Binance CEO Richard Teng shared with Bloomberg that this year has seen a significant increase in such requests, with the total reaching 63,000 as of 2024.
Furthermore, Binance’s dedicated teams focusing on sanctions, anti-corruption, and anti-bribery (ABC) are vigilant in tracking legislative updates to ensure policies stay current and discourage unscrupulous activities. The Global Money Laundering Reporting Officer (GMLRO) team, together with the High-Risk Clients team, enforce heightened scrutiny and surveillance over high-risk transactions to minimize potential risks.
It is interesting to note that Teng himself has extensive experience in regulatory compliance. He has previously served as a senior regulator at the Monetary Authority of Singapore and as the CEO of the Financial Services Regulatory Authority at Abu Dhabi Global Market.
Under the guidance of Teng, Binance has adapted its approach towards prime brokers, tightened the standards for listing fresh cryptocurrencies, and spun off its venture division into a standalone entity.
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2024-08-22 12:09