A timeline of US enforcement actions
Binance and its founder Changpeng “CZ” Zhao have admitted to violating US laws on money laundering and terrorist financing – agreeing to pay $4.3 billion in fines.
The Department of Justice's investigation into Binance began years ago, while other US regulatory agencies began their own crackdown on the crypto exchange.
Here's what happened.
February 15: Binance has been suspect since 2018.
Reports surfaced that Binance was the target of several US law enforcement investigations – some dating back to 2018.
March 1: Congress gets involved – Elizabeth Warren leads the charge.
Binance came under the control of the United States Congress on March 1. Senators Elizabeth Warren, Chris Van Hollen and Roger Marshall demand answers from Binance CEO Changpeng “CZ” Zhao and Binance.US CEO Brian Schroeder for several allegations and the companies' accounting records. The senators were not satisfied with the answers and the executives were later accused of lying.
March 27: CFTC hit with 7 lawsuits
The Commodity Futures Trading Commission (CFTC) has filed charges against Zhao, Samuel Lim, chief compliance officer of Saul, and Binance, citing seven counts of trading violations and market manipulation. The CFTC investigation is reportedly set to begin in 2021. Zhao vehemently denied the allegations.
May 5: DOJ also eyes Binance.
According to Bloomberg, Binance is under investigation by the Department of Justice for violating sanctions imposed on Russia. Binance continued its presence in Russia until September.
The Justice Department is investigating whether Binance was used illegally by the Russians to circumvent US sanctions and the world's largest cryptocurrency https://t.co/AVgG55iSmx .
— Bloomberg Crypto (@crypto) May 5, 2023
June 5: SEC hit with 13 lawsuits
The Securities and Exchange Commission on June 5 filed a lawsuit against Binance, Binance.US and Zhao on 13 charges, including unregistered sales of securities, allowing US customers to use the Binance exchange, combining customer and corporate funds and laundering sales.
The SEC has obtained an emergency suspension order on Binance.US and the exchange has significantly reduced its US activity.
July 6: Binance's leadership begins to emerge
Four senior members of the Binance.US team have left the company, starting a wave of departures that has continued for months.
August 2: DOJ Mules move on Binance
The Department of Justice is reportedly considering fraud charges against Binance. The department at the time resorted to fines or non-prosecution agreements to avoid the exchange process.
August 14: Binance.US moves to block SEC
Binance.US sought a protective order against the SEC, alleging that the SEC had launched a “fishing spree” during the discovery process. Binance insists it is working in good faith on the process.
Binance seeks protective order against SEC, saying they're conducting a “fishing expedition.” https://t.co/NquMV8ShNK
— Molly White (@molly0xFFF) August 15, 2023
September 13-14: Binance.US cuts staff, lays off CEO and SEC responds
Binance.US has laid off a third of its staff — about 100 people — and CEO Brian Schroder is also out. The SEC complained to the court about Binance's lack of cooperation in the discovery process.
September 19: Binance.US gets a small win against the SEC
Binance.US scored a small victory when the court blocked the SEC from using the exchange's software. Instead, the judge suggested the SEC should be more specific in its discovery requests.
September 21: Binance wants SEC suit dropped
Zhao, Binance and Binance.US asked the court to dismiss the SEC's lawsuit against them. The SEC has been challenged by misinterpreted securities laws and is reasserting its authority. The SEC responded that Binance “has a tortured legal meaning.”
October 23: Binance wants CFTC suit dropped
Binance has filed a motion to dismiss the CFTC's lawsuit. If the CFTC wins, it will “allow it to regulate any activity in the underlying cryptocurrency […] related to single derivatives” around the world, Binance said. “Congress did not make the CFTC the world's derivatives police, and the court should reject the agency's efforts to expand its jurisdiction beyond what is permitted by law,” the exchange added.
October 26: CZ's fortunes plummet, Congress wants DOJ to strike
The Bloomberg Billionaires Index has dropped Zhao from 11th place among the world's richest people to a modest 95th. His personal wealth is said to have dropped from $96.9 billion to $17.3 billion. In November's list, however, it rose to 68th place.
That same day, Senator Cynthia Lammis and Representative French Hill called on the Justice Department to allow sanctions on Binance and Tether to evade them. This was two weeks after Binance banned Hamas-linked accounts.
November 21: CZ and Binance are sued
On November 14, the government filed a lawsuit against Binance and Zhao in the state of Washington. The documents were unsealed on November 21. Zhao will step away from Binance as part of the deal.
Penalties, including fines against Zhao and Lim, total more than $4 billion.
We are pleased to share that we have reached a resolution with several US agencies related to their investigation.
This allows us to open a challenging yet dynamic learning phase that has helped us make the site a stronger, safer and more secure platform.
— Binance (@binance) November 21, 2023
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