Lapses at Binance allowed terrorist groups to trade Bitcoin
US authorities say that terrorists, hackers, and sanctions violators used Binance for years to transfer billions of dollars. Binance and CEO Changpeng Zhao earlier today pleaded guilty to criminal charges, acknowledging weak controls over cryptocurrency transactions on their platform. The company will pay a $4.3 billion fine. Zhao has resigned as CEO and will pay a $50 million fine. This follows a lengthy investigation by federal prosecutors and the conviction of Sam Bankman-Fried in the FTX fraud.
Treasury Secretary Janet Yellen's statement on Binance's failures
The US Department of Justice and the Treasury Department's Financial Crimes Enforcement Network (FinCEN) revealed that Binance employees participated in misconduct, with many aware of the implications of allowing millions of illegal transactions. Treasury Secretary Janet Yellen said, "Binance turned a blind eye to its legal obligations in the pursuit of profit. Its willful failures allowed money to flow to terrorists, cybercriminals, and child abusers through its platform."
Examples of illegal transactions enabled by Binance
The US said Binance's shortcomings led to numerous illegal transactions on the platform. The allegations include fundraising for terrorist groups like Hamas, al-Qaeda, and ISIS through the platform. There were about 1.1 million transactions worth $899 million made by individuals in Iran, violating US sanctions. Transactions involving users in Cuba, Syria, Crimea, Donetsk, and Luhansk also violated US sanctions. Binance received $275 million from BestMixer, linked to criminal funds, and processed $106 million from Hydra Market, a Russian darknet site.
Ransomware and child pornography transactions on Binance
FinCEN also found that Binance addresses processed tens of millions of dollars in transactions linked to 24 types of ransomware, such as SamSam, Satan, and WannaCry. While Binance cooperated with law enforcement when informed, it withheld crucial information about these attacks. Moreover, over 1,000 transactions occurred involving three marketplaces that traded in child pornography and related content. One such site, Dark Scandals, featured violent rape videos and had its administrator indicted in 2020.
