Binance has been facing an alarming rate of legal setbacks worldwide as multiple governments bring the regulatory hammer down on them. French authorities conducted a raid, The Netherlands denied licensing, and the U.S. regulators threw serious accusations, only adding to their woes.
The latest hurdle came from Australia when the Australian Securities and Investments Commission (ASIC) demanded access to Binance's internal communications and personal device data.
CEO Changpeng "C.Z." Zhao dismissed any concern despite key legal and compliance executives leaving the company. It only raises the question, will Binance survive the string of legal battles ahead?
It's not only Binance facing the heat but rival companies like Coinbase, who have been combating such regulatory crackdowns that often lack clarity. Binance's Head of Law Enforcement, Jareck Jakubcek, said he welcomes opportunities to engage with regulators and support clearer game rules.
Regulatory interference had never been a problem for Binance, as they were minimal for years. But recent events have forced the crypto company to go on the defensive. The U.S. Securities and Exchange Commission (SEC), and the U.S. Commodity Futures Trading Commission (CFTC), shot a barrage of charges, dropping Binance's BNB token value by 17%, not to mention a significant loss of customers.
A recent warning from Alex Zerden, ex U.S. Treasury official, CEO & founder of Capitol Peak Strategies, brews more trouble for the company. If true, Zerden states that the allegation could involve criminal and civil misconduct and even national security concerns.
Binance's massive global footprint means these allegations will require monumental cooperation among authorities across a myriad of jurisdictions. According to a spokesperson from the company, the latest case involves ASIC investigating Binance Australia's former derivatives operations. However, the spokesperson also clarifies that ASIC investigators did not visit Binance's offices. While Binance still operates a spot-trading exchange in Australia, it discontinued its futures products earlier this year.
While ASIC confirmed that an "ongoing" investigation into Binance is taking place, a spokesperson stated the regulator is "unable to confirm or deny any operational detail such as possible searches."
Last month saw a raid conducted by the public prosecutor in Paris, who accused the exchange of "aggravated money laundering," along with other "illegal" services. The allegations were that Binance operated as a digital asset service provider before receiving regulatory approval in May 2022. It was also alleged that the company engaged in money laundering by participating in ''investment operations, concealment, and conversion.''
The Netherlands opened up a new set of issues for the company when the Dutch financial regulator denied them a virtual asset service provider (VASP) license, forcing the exchange to withdraw. The license would have verified compliance with local anti-money laundering requirements.
The US SEC hit Binance with thirteen charges last month, alleging that the exchange was not registered and had sold unregistered crypto assets to U.S. investors. Binance disputed the accusations, citing a lack of clarity regarding regulations and framework.
Reports say that several key Binance executives have left the company, including the chief strategy officer, chief business officer, general counsel, and senior vice president of compliance. CEO, Changpeng "C.Z." Zhao downplayed the significance of these departures and dismissed media speculation linking them to his handling of a U.S. Department of Justice (DOJ) investigation.
There is no doubt of a phenomenal collaboration between regulators and prosecutors to build their cases against the exchange. The simultaneous lawsuits, pushbacks, and investigations across various countries where Binance operates indicate a global crackdown.
The U.S. DOJ's recent arrest of Anatoly Legkodymov, founder of Bitzlato Ltd, is a prime example of such coordinated moves. The U.S. Treasury specifically identified Binance as Bitzlato's primary counterpart.
Although Binance has not faced any direct criminal charges yet, it does not absolve them of accusations or guilt. There might be sealed charges which only become apparent when key executives are within the reach of the law. On the other hand, a Binance spokesperson confirms they are taking a cooperative stance with regulatory requests.
Despite accusations taking a toll, Binance continues to operate globally, but with grave consequences. Binance.US, the company's U.S. wing, has discontinued all deposits made in dollars. The recent banking service losses have forced them to convert into an exchange that is strictly crypto exclusive. It's clear Binance needs an alternative for Euro transactions as they have lost Paysafe, their banking partner in Europe, which will stop supporting them post-September 25.
In response to the SEC's concerns about potential misappropriation of funds from U.S. customers, Binance has added legal firepower to its team, including former DOJ officials and SEC officials. The SEC aims to gain control over Binance's cash flow through the legal battle, further complicating the landscape for the exchange and the broader crypto industry.
Binance's legal battles highlight the need for guidance and expertise to address the crypto industry's complex legal and technological landscape.