As of 10 p.m. on December 4th, CZ (Changpeng Zhao) has only tweeted four times in December, or strictly speaking, two times. The latest one is a simple greeting with just two letters:
The earlier tweet commemorated his bold move ten years ago when he sold his house in Shanghai and went all-in on Bitcoin:
The earlier two tweets were mere retweets. One shared an article from Binance Academy titled "What is Bitcoin ETF?" while the other relayed a press release from the new CEO, Richard Teng, about Binance piloting a banking triparty agreement to assist institutional investors in managing counterparty exposure.
At this moment, Zhao appears to be meditating in the calm eye of the storm, displaying an unprecedented level of restraint. However, this doesn't alter the fact that Binance is struggling in the midst of a tempest. Can his god-like restraint withstand the metaphorical storms and towering waves? That remains a serious question.
Nevertheless, compared to a year ago when a single tweet could sink industry ex-titan SBF and FTX, Zhao has undergone a transformation from a fierce-looking Guan Gong (a Chinese deity symbolizing loyalty and righteousness) to a serene Bodhisattva with closed eyes.
This particular storm stemming from the U.S. government's regulatory bodies shows no signs of abating, with the latest rumblings suggesting a possible ten-year prison sentence for Zhao.
How Will the Largest Settlement in U.S. History Be Divided?
FinCEN and OFAC has earmarked $3.4 billion and $0.968 billion, respectively, according to the U.S. Department of the Treasury's announcement on November 21:
As a Money Services Business (MSB), Binance had an obligation to report suspicious transactions to FinCEN through Suspicious Activity Reports (SARs). FinCEN's investigation revealed that Binance's former compliance officer had informed employees that the CEO's policy was not to report such activities. It also appears that Binance had never submitted an SAR to FinCEN.
Due to Binance's serious lack of risk control measures, such intentionally unreported suspicious transactions amounted to over 100,000 over the years. These transactions were found to be related to terrorist organisations, ransomware, child pornography, the dark web, and other fraudulent activities.
Terrorist Organisation Funding
Binance did not report transactions related to terrorist organizations, including Al-Qaeda, ISIS in Iraq and Syria, Hamas' Al-Qassam Brigades, and Palestinian Islamic Jihad (PIJ).
Ransomware
Despite being one of the highest-grossing exchanges in ransomware transactions, facilitating transactions involving millions of dollars in at least 24 different ransomware attacks, Binance did not report these transactions.
Child Pornography
Binance did not report transactions related to websites that specialised in selling child pornography information, including Dark Scandals.
Dark Web, Cyber Fraud, and Other Illicit Activities
Despite sending and receiving virtual asset proceeds from large-scale hacker attacks, account takeovers, and transactions on the dark dealing with illegal drugs, counterfeit goods, and fraud-related products and services, Binance did not report any such transactions.
To fill the gap of not reporting these and other types of illegal activities to law enforcement agencies, Binance has agreed to retrospectively review past records, identify, and report to FinCEN the suspicious transactions that it handled but intentionally did not report.
The U.S. Commodity Futures Trading Commission (CFTC) stated that, through this joint law enforcement campaign, it has requested Binance to surrender $1.35 billion in illicit gains and pay a civil penalty of $1.35 billion to the CFTC. In addition, Changpeng Zhao is required to personally pay a civil penalty of $150 million to the CFTC. This penalty is the largest ever imposed in the history of the regulatory agency.
And we're not stopping there. This only involves the facts of the case i.e., what has already happened. Within the next five years, Binance will continue to be at the mercy of the storm.
According to the U.S. Department of the Treasury's settlement announcement with Binance, the Financial Crimes Enforcement Network (FinCEN) will impose a five-year regulatory period, retaining its access to records and systems. Binance is required to make significant compliance commitments, including ensuring a complete exit from the U.S. OFAC's settlement agreement – which in addition to a $968 million fine, requires Binance to comply with a series of strict sanctions compliance obligations, including full cooperation with regulatory authorities supervised by FinCEN.
In other words, for the next five years, Binance will carry a sword of Damocles over their head, facing potential fines over its head with each step they take.
See: Navigating the Storm: Where Exactly is CZ Leading Binance? (Part 2)
See: Navigating the Storm: Where Exactly is CZ Leading Binance? (Part 3)
Joy
