Binance Faces Mounting Pressure as U.S. Crypto Crackdown Intensifies
For years, the giant cryptocurrency exchange Binance has had a reputation for dodging regulators and skirting financial rules, all without significant consequences.
Now the world’s largest crypto exchange is facing mounting legal pressure.
Changpeng Zhao, Binance’s founder and chief executive, has hired white-collar defense lawyers at the law firm Latham & Watkins to represent him personally, as he and his company face a tightening legal net. Justice Department prosecutors are investigating the exchange for money laundering violations, as the Securities and Exchange Commission is looking into the company’s business practices. Last month, another agency, the Commodity Futures Trading Commission, sued Mr. Zhao, accusing him of compliance failures that allowed criminals to launder money on Binance.
The legal threats have converged to create the most precarious moment in Binance’s history. Criminal charges against Mr. Zhao or his company could set off mass panic in the crypto markets, which are reeling from the FTX exchange’s collapse last year and the arrest of the firm’s founder, Sam Bankman-Fried. Binance is several times larger than FTX was, processing tens of billions of dollars in trades every day.
“It’s the biggest exchange for crypto, and if it gets clamped down on, that’s going to be a big deal,” said Hilary Allen, a crypto expert at American University. “It’s hard to see the rest of the crypto industry remaining unscathed.”
Source: The New York Times
