The landmark settlement between crypto exchange Binance and U.S. authorities, including the DOJ, OFAC, and FinCEN. The agreement contains explosive material for the crypto industry. This settlement mandates Binance to exit the U.S. completely and puts the crypto exchange under strict FinCEN monitoring. It has to report 100,000 suspicious transactions retrospectively, which will potentially expose partners such as Advcash.
The FinCEN Findings
Central to this settlement and to the global crypto industry is Binance‘s commitment to retroactively report over 100,000 suspicious transactions, which it previously failed to register as required by U.S. anti-money laundering (AML) and counter-terrorist financing (CTF) laws. This failure extends to Binance‘s lack of registration as a Money Services Business (MSB) in the U.S. and its omission in filing Suspicious Activity Reports (SARs).
FinCEN’s investigation brought to light that Binance‘s former Chief Compliance Officer had advised against reporting suspicious activities, leading to a complete absence of SARs filings. This dereliction of duty encompassed transactions linked to terrorist groups, ransomware proceeds, child sexual exploitation materials, and other illicit activities:
- Terrorist Financing. Binance failed to report to FinCEN transactions associated with terrorist groups including Al Qaeda, the Islamic State of Iraq and Syria (ISIS), Hamas’ Al-Qassam Brigades, and Palestinian Islamic Jihad (PIJ).
- Ransomware. Despite being one of the largest receivers of ransomware proceeds, and transacting in millions of dollars of ransomware proceeds from attacks involving at least 24 different strains of ransomware, Binance failed to report these transactions.
- Child Sexual Abuse Materials. Binance never reported transactions with websites devoted to selling child sexual abuse materials, including Dark Scandals.
- Darknet Markets, Scams, and Other Illicit Activity. Despite sending and receiving virtual assets proceeds from large-scale hacks, account takeovers, and darknet markets dealing in illegal narcotics, counterfeit and fraud-related goods and services, as well as other illegal contraband, Binance never reported any such transactions.
Binance did not do this alone but brought in supporting payment processors such as Advcash for deposits and withdrawals. These will be named accordingly in the 100,000 suspicious transactions.
Exposing Advcash et al
The impending analysis of these transactions, under FinCEN‘s scrutiny, is expected to unravel deeper connections and potentially implicate Binance‘s partners. For instance, Binance‘s association with the Russian payment processor Advcash is likely to come under the microscope. Advcash, known for its popularity among questionable entities, including cybercrime organizations and terrorist groups, is deeply embedded in the Russian financial system.
The online analysis site Protos has labeled Advcash a Russian money laundering operation. Despite Binance‘s recent severance of ties with Advcash, the implications of their past association may still unfold.
Furthermore, the comprehensive cooperation pledged by Binance‘s resigned founder and former CEO, Changpeng Zhao (CZ), in his plea agreement is likely to lead to additional revelations. This cooperation, coupled with the extensive analysis of suspicious transactions, could trigger a domino effect, unearthing practices and partnerships that have so far evaded scrutiny.
In conclusion, while the Binance settlement marks a significant step towards compliance, it also heralds a new era of increased oversight in the crypto industry. The repercussions of this settlement may extend far beyond Binance, potentially leading to a substantial shake-up in the crypto landscape, especially among its network of partners and associates.
If you have any information about Binance, its network and its partners, please let us know via our whistleblowing system, Whistle42.