Binance brought millions of people into finance but forgot the paper – Columbia professor

Recent events surrounding the crypto exchange Binance have sparked a heated debate about the United States' crackdown on crypto companies. According to Omid Malekan, an assistant professor at Columbia Business School and author, the Justice Department's approach to the issue is very different from that seen in traditional finance.

“People who honestly believe that crypto is a special incentive for bad people to do bad things don't understand how the rest of the financial system works,” Malekan wrote on X (formerly Twitter). Best practices still handle large amounts of illicit funds. “But since someone did the paperwork, that's all considered good.”

Malekan also argued that many of the traditional firms on Wall Street would be arrested if they were given the same treatment as Binance.

“If they were caught by Binance Standard, hundreds of managing directors would be in jail and less money for shareholder buybacks (or lobbying). But the banks were smart enough to never question the game.

Despite the criticism, Malekan believes the exchange is still “wrong to lie to its customers and wrong to be disobedient”. Binance and its co-founder Changpeng “CZ” Zhao recently reached a billionaire settlement with the US government for allegedly allowing individuals engaged in illegal activities to move “stolen funds” through the exchange. CZ stepped down as chief executive as part of the settlement.

Malekan also praised Binance's contribution to financial inclusion over the past few years:

“He has done a great job of bringing tens of millions of poor, brown and otherwise disadvantaged people into the financial system, something the world's compliant financial institutions have failed to do.”

ICIJ investigation into international money laundering

Leaked documents from the International Consortium of Investigative Journalists (ICIJ) show that some of the world's biggest banks have allowed trillions of dollars to be stolen by criminals.

The investigation, announced in September 2020, involved more than 2,100 Suspicious Activity Reports (SARs) between 1999 and 2017 involving more than $2 trillion worth of transactions by the financial institutions' internal compliance officers as evidence of money laundering or criminal activity. Banks that facilitate these transactions include major institutions such as Bank of New York Mellon, Deutsche Bank and HSBC.

ICIJ organizes more than 400 journalists from 110 news organizations in 88 countries to investigate banks involved in money laundering.

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