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The US government has sent a clear message to the world of cryptocurrencies, which has a market size of approximately $1.4 trillion.
Cryptocurrency investors hope to recover from historic conviction of Sam Bankman Fried, disgraced founder and former CEO of collapsed crypto exchange FTX Just then, the US authorities once again used force against criminal activity surrounding virtual currencies.
Billionaire Qiao Changpeng, the founder of the world's largest cryptocurrency exchange Binance, said on Tuesday that he has failed to maintain an effective anti-money laundering program, allowing all kinds of bad actors to use the platform to transfer funds. He pleaded guilty to allowing this to happen.
Here are five takeaways from the largest fine ever imposed on a money services business in U.S. history. This fine happened to be a cryptocurrency company.
Zhao and Bankman Fried were primarily seen as the faces of the cryptocurrency industry. His guilty plea, along with Bankman Fried's, is what the good guys in the crypto industry are looking for to prove to skeptics that these two were the exception and not the norm. This means that we have to make a more persuasive argument.
In light of Tuesday's news, Coinbase CEO Brian Armstrong has accused his cryptocurrency exchange and Binance of engaging in anti-money laundering, unauthorized transfers, and sanctions violations. We took the opportunity to differentiate between
“Since we founded Coinbase in 2012, we have taken a long-term view. We knew that to become a generational company that would stand the test of time, we needed to be compliant. ,” Armstrong said in an X post Tuesday afternoon.
“Today's news confirms that doing it the hard way was the right decision. We now have an opportunity to start a new chapter in our industry,” he added.
At the same time, government agencies that oversee cryptocurrency regulation and compliance don't want people to forget Bankman-Fried and Zhao.
“In the past month, the Department of Justice has successfully prosecuted the CEOs of two of the world's largest cryptocurrency exchanges in two separate criminal cases,” Attorney General Merrick Garland said at a press conference on Tuesday. Stated. “The message here must be clear: Using new technology to break the law does not make you a subversive. It makes you a criminal.”
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Binance's former chief executive, Qiao Changpeng, has pleaded guilty to failing to maintain an effective anti-money laundering program and could be sentenced to up to 18 months in prison.
Cryptocurrencies fell on Tuesday as investors digested the latest regulatory news from Washington, DC. But by Wednesday, they had made a spectacular comeback.
Binance Coin initially fell by about 6% after the US Department of Justice announced that Zhao had been indicted following a multi-year investigation into Binance. As of Wednesday morning, prices were up 3.5%.
Other cryptocurrencies also suffered on Tuesday, as the Fed's massive crackdown also squeezed crypto companies such as Kraken and Tether.
Bitcoin fell about $420, or 1.1%, to $37,071. Meanwhile, Ethereum fell $40, or 2%, to $1,997 per coin.
By Wednesday, both Bitcoin and Ethereum had recovered. Bitcoin rose 2.4% and Ethereum rose 5%.
So what does swing explain?
Some reports late Tuesday suggested that Zhao's deal with the Justice Department could allow him to retain a majority stake in Binance. That raised investors' expectations. They were also just waiting for the long investigation to finally come to an end.
Overall, this year has been a good year for cryptocurrencies. Bitcoin is up about 120% since the beginning of the year. Ethereum has risen nearly 70% over the same period.
Binance's agreement with the government requires it to cease operations in the United States.
On Tuesday night, people based in the United States received a notification on the Binance.com site that said “Not available in your country or region.” However, there are some minor details.
“If you are in the United States or in some U.S. territories, Binance.US is a U.S.-regulated platform where you can buy, trade, convert, and stake cryptocurrencies for low fees,” the notice continued.
Binance.US is a subsidiary of Binance that was founded in 2019 to “serve U.S. consumers and comply with U.S. regulations,” according to a post on the site.
Treasury officials said Tuesday's announcement will not affect Binance.US because it is a registered money services business. This means that people in the US can still buy and sell cryptocurrencies under the roof of Binance.
Tuesday's announcement is a vivid example of the federal government's tough stance on illegal activities involving cryptocurrencies. Simply put, federal authorities, from the Securities and Exchange Commission to the Treasury Department, aren't playing around.
Just this week, the SEC charged another cryptocurrency exchange, Kraken, with operating as an unregistered securities exchange. The agency's lawsuit also alleges that the exchange confused its customers' assets with its own holdings.
This is not the first time the SEC has sued Kraken.In fact, this is one of several lawsuits authorities have filed this year against crypto companies such as Bittrex and Bittrex. Coinbase. The SEC's lawsuit against Binance for allegedly violating investor protection laws is still pending.
Tiffany Hagler-Geard/Bloomberg/Getty Images
Binance will withdraw from the United States as part of the cryptocurrency exchange's agreement with law enforcement agencies.
Despite several adverse rulings this year, the SEC is expected to continue to aggressively police crypto companies, including taking them to court.
But if Tuesday's big announcement made anything clear, it's that it's not just the SEC that's trying to stop cryptocurrency fraud, it's the entire federal government.
This includes the Department of Justice and the Commodity Futures Trading Commission., and the Ministry of Finance. There is also a National Cryptocurrency Enforcement Team within the Department of Justice that proactively identifies and investigates criminal cases related to digital assets.
“While criminal and civil enforcement actions are subject to different legal standards, this joint effort represents a whole-of-government approach to combating corporate crime,” Garland said Tuesday.
U.S. authorities already have a nifty regulatory toolbox at their disposal to root out financial crime, including laws criminalizing money laundering and bank fraud.
This is exactly how the federal government secured the first-ever corporate settlement with a virtual currency exchange.
“Both in our actions today and in previous litigation, we will relentlessly use every tool we have in place against those who seek to use technology in ways that exploit our platform. I understand… or [that] Do not prevent these platforms from being used for illegal activities,” Deputy Attorney General Lisa Monaco said at a press conference on Tuesday.
But officials suggested there was room for new regulations.
Calls for “regulatory clarity” are not new, and new crypto regulations could help both investors and law enforcement authorities distinguish legitimate crypto products from criminal veneers. be.
It is unclear when and how comprehensive cryptocurrency regulation will materialize. One way is through agency-level rulemaking at either the SEC or the CFTC, which remains subject to judicial review if challenged in court. The other is through Congress.
“I have been advocating for closing these gaps, especially around commodity tokens, and if we can do that, obviously with support from Congress, we can prevent this kind of behavior from happening and then we need to come here. I think it’s going to go away.’ That’s a fact,” CFTC Chairman Rostin Benham said Tuesday.
