U.S. DOJ Intensifies Scrutiny of Binance Exchange

The regulatory pressure on leading digital asset service provider Binance is building daily with the United States authorities on its tail.

After requesting over $4 billion as a settlement charge to resolve its legal issues with the cryptocurrency exchange, The U.S. Department of Justice (DOJ) has intensified its scrutiny of Binance. This time around, the DOJ is demanding strict compliance with financial regulations. 

Compliance Tsunami Threatens Binance Operations 

According to some industry observers, the ‘compliance tsunami’ requires that the top trading firm adhere strictly to the financial regulations in the United States. The enforcement action will likely have a ripple effect on Binance’s operations as well as that of other crypto ventures. The company is already being forced to make hard decisions as it stands to keep its operations going.

Changpeng ‘CZ’ Zhao, Binance founder has exited his role as CEO of the platform amidst these legal debacles. He has been ordered to remain in the United States until his sentencing hearing in February. 

SEC Builds Case Against Binance 

Former SEC enforcement attorney, John Reed Stark, reiterated the strain that the new development will put on the trading platform, especially having to operate under traditional financial regulations. Unfortunately, the SEC is building its case against Binance by leveraging some of the DOJ’s recent findings. The regulator’s focus is on areas where Binance fell short of regulatory compliance. 

In its June lawsuit against the crypto exchange, the SEC accused Binance of operating unregistered U.S. financial companies, misleading investors about the companies’ risk management practices, inflating trading volumes, and transforming and sending “billions of dollars of investor assets” to an external entity managed by CZ. This matter remains unsettled.

Regulatory Scrutiny Force Crypto Businesses Out of U.S.

This enforcement action transcends Binance as it also demonstrates the U.S. government’s increasing scrutiny of the crypto landscape prevalent in its region. Such strategies have gradually forced many of these crypto-inclined companies to push out of the U.S. to other regions that are more receptive towards blockchain technology. 

In the last twelve months, Binance has registered in more than five nations to secure its license for operations. In August, the renowned exchange wielded the first-ever operational digital assets license in Dubai, UAE. Overall, Binance has licenses from Spain, Bahrain, Kazakhstan, Thailand, and many other countries.