US DOJ Negotiates With Binance Over $4bn Settlement

The US Justice Department is reportedly in negotiations with Binance Holdings over a $4 billion (£3bn) deal that could resolve its years-long criminal investigation into the world’s biggest cryptocurrency exchange and its co-founder and chief executive Changpeng Zhao.

The proposed deal could see Zhao, known as CZ, face criminal charges in addition to the massive financial penalty, which would be one of the largest ever in a criminal cryptocurrency case, Bloomberg and other media outlets reported, citing unnamed sources.

An announcement in the probe over alleged money laundering, bank fraud and sanctions violations could reportedly come as soon as the end of this month.

Binance’s BNB cryptocurrency rose on the news as investors speculated that Binance may be able to reach a compromise with investigators allowing it to evolve in what cryptocurrency venture firm Castle Island Ventures called “a more institutional and compliant future direction”.

Negotiations

The Justice Department is seeking a deal that would allow Binance to continue operating, rather than risk a collapse that could harm markets and crypto holders, three people told Bloomberg.

The crypto industry has been rocked by multiple high-profile failures in recent months, notably that of trading platform FTX, which formerly held the top spot with Binance until it abruptly entered bankruptcy in November 2022.

FTX founder and chief executive Sam Bankman-Fried was found guilty of fraud and money-laundering charges, amongst others, earlier this month.

Binance has sought to  minimise its exposure in any settlement and has pushed for a deferred prosecution agreement, according to Bloomberg.

Under such a deal the Justice Department would file a criminal complaint against the firm, but would not proceed with it as long as Binance met agreed conditions, with a process in place to monitor compliance.

Money laundering

The investigation has included allegations that Binance enabled evasion of sanctions against Iran and Russia and finance for Hamas, which is currently engaged in an active conflict with Israel.

Following Hamas’ attack on Israel on 7 October the state shut down more than 100 Binance accounts and requested information on up to 200 additional accounts, most of which were held on Binance, the Financial Times reported.

Last month US senator Cynthia Lummis and representative French Hill called on the Justice Department to “expeditiously conclude” its investigations into Binance and reach a decision on criminal charges for the firm concerning possible aid to Hamas.

Binance has clashed with other US regulators this year, including a lawsuit by the Commodity Futures Trading Commission in March and 13 civil charges from the Securities and Exchange Commission in June.