DOJ Weighs Fraud Charges against Binance, Worried about Bank Run: Report

<p>US
prosecutors are mulling over whether to initiate criminal charges against
Binance, thereby turning the heat on <a href="https://www.financemagnates.com/cryptocurrency/sec-charges-binance-ceo-over-illegal-exchanges-commingling-of-client-fund/" target="_blank" rel="follow">13 civil charges</a> filed by the securities
watchdog against the top crypto exchange earlier in June, Semafor reported today
(Wednesday), citing insider sources. However, the Department of Justice (DOJ)
is worried that such action could lead to a bank run, throwing the exchange
into a position similar to that of the <a href="https://www.financemagnates.com/cryptocurrency/ftx-officially-floats-plan-to-restart-international-crypto-exchange/" target="_blank" rel="follow">now-bankrupt crypto exchange, FTX</a>. </p><p>Prosecutors
Contemplate Charges</p><p>According
to the report, the DoJ is contemplating opting for other measures such as fines
and deferred or non-prosecution agreements (NPAs). An NPA means that the federal prosecutor, despite believing that a crime has been committed, will delay prosecution in exchange for the crypto firm's compliance with certain conditions. </p><p>These
conditions could range from payment of fines and the institution of corporate reform to full cooperation with the department's probe. In such cases, the charges are dismissed if the
defendant complies with the conditions.</p><p>Binance, the biggest global
crypto exchange in terms of trading volume, entered the US crypto market
in September 2019 after obtaining
registration from the Financial Crimes Enforcement Network (FinCEN) for its affiliate in
the country. The local unit was to serve US
customers independently
of the global exchange. </p><p>Regulatory Hurdles in the US</p><p>However, in recent
months, pressure has mounted on the crypto exchange with regard to its operations
in the United States. In June, Senators Elizabeth Warren
and Chris Van Hollen <a href="https://www.financemagnates.com/cryptocurrency/us-senators-say-binance-may-have-lied-to-congress-report/" target="_blank" rel="follow">asked
the DOJ</a> to look
into whether Binance made false representations to lawmakers earlier in March
about its business dealings and ties to its local unit</p><p>The US lawmakers’
request came days after <a href="https://www.financemagnates.com/cryptocurrency/sec-charges-binance-ceo-over-illegal-exchanges-commingling-of-client-fund/" target="_blank" rel="follow">the
SEC accused Binance</a> and its
CEO, Changpeng Zhao of operating illegal trading platforms,
offering unregistered crypto asset securities and <a href="https://www.financemagnates.com/cryptocurrency/binance-jumbled-customer-funds-with-company-revenue-report/" target="_blank" rel="follow">commingling customers’ funds</a>. Two months earlier, the Commodity Futures
Trading Commission (CFTC) <a href="https://www.financemagnates.com/cryptocurrency/cftc-sues-binance-for-illegal-derivatives-exchange-numerous-violations/" target="_blank" rel="follow">made
similar allegations</a> against the exchange and Zhao. </p><p>However, Binance in
its response said the allegation that users'
assets on its US trading platform were at risk was "simply
wrong.” The exchange also
recently <a href="https://www.financemagnates.com/cryptocurrency/binance-ceo-criticize-sec-over-claims-they-commingled-clients-assets/" target="_blank" rel="follow">slammed
the securities watchdog</a> over a recent press statement in which the agency
claimed Binance commingled customers’ assets with company resources. Binance in
a motion asked the district court in Columbia to order the SEC “to comply with
all applicable rules of conduct concerning extrajudicial statements.”</p><p>Furthermore, the
exchange and its CEO are
planning <a href="https://www.financemagnates.com/cryptocurrency/binance-takes-on-cftc-with-plans-to-seek-dismissal-of-lawsuit/" target="_blank" rel="follow">to
seek the dismissal of charges</a> filed by the CFTC in
March, <a href="https://www.financemagnates.com/" target="_blank" rel="follow">Finance Magnates</a> recently reported. However, recent media reports
suggest that Zhao <a href="https://www.financemagnates.com/cryptocurrency/changpeng-zhao-was-aware-of-wash-trading-on-binanceus-report/" target="_blank" rel="follow">was
aware of wash trading activities</a> on Binance.US, which is one of the allegations in the SEC's lawsuit. Reports also suggest that the Binance's CEO also <a href="https://www.financemagnates.com/cryptocurrency/binances-zhao-pushed-to-shutter-us-exchange-ahead-of-lawsuits/" target="_blank" rel="follow">considered
shutting down the US affiliates</a> earlier this year to protect the crypto
exchange’s wider global operations. </p><p>

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This article was written by Solomon Oladipupo at www.financemagnates.com.