United States government agencies spent months, sometimes years, investigating Binance in the lead-up to unsealing an indictment against the exchange.
Binance and its founder, Changpeng “CZ” Zhao, have admitted to violating United States laws around money laundering and terror financing, agreeing to pay $4.3 billion in fines.
The U.S. Justice Department’s probe into Binance started years earlier, and in the meantime, other U.S. regulatory agencies launched their own actions against the crypto exchange.
Here’s what happened:
Feb. 15: Binance had been under suspicion since 2018
Reports emerged that Binance was the target of several U.S. law enforcement investigations — some dating back to 2018.
March 1: Congress involved — Elizabeth Warren leads the charge
Binance came under U.S. Congress scrutiny on March 1 as Senators Elizabeth Warren, Chris Van Hollen and Roger Marshall sent a letter to CZ and Binance.US CEO Brian Shroder requesting answers to several allegations and access to the companies’ balance sheets. The senators were not satisfied with the responses, and the executives were later accused of lying.
March 27: CFTC strikes with seven charges
The Commodity Futures Trading Commission (CFTC) filed suit against Zhao, chief compliance officer Samuel Lim and Binance, naming seven counts of trading irregularities and market manipulation. The CFTC investigation reportedly began in 2021. Zhao vehemently denied the charges.
May 5: DOJ also has eyes on Binance
The Justice Department is investigating whether Binance was used illegally to let Russians skirt US sanctions and move money through the world’s biggest cryptocurrency exchange https://t.co/AVgG55iSmx
— Bloomberg Crypto (@crypto) May 5, 2023
June 5: SEC strikes with 13 charges
The Securities and Exchange Commission filed suit against Binance, Binance.US and Zhao on June 5 with 13 charges, including unregistered securities sales, allowing U.S. customers to use the Binance exchange, intermingling customer and corporate funds, and wash sales.
July 6: Binance leadership exodus starts
Aug. 2: DOJ mulls move on Binance
The Justice Department was reported to be considering fraud charges against Binance. To avoid a run on the exchange, the department was leaning toward fines or nonprosecution agreements.
Aug. 14: Binance.US scrambles to block SEC
Binance.US sought a protective order against the SEC, accusing it of launching a “fishing expedition” in its discovery process. The exchange insisted it was acting in good faith in the process.
Binance is seeking a protective order against the SEC, claiming that they are conducting a “fishing expedition”.https://t.co/NquMV8ShNK
— Molly White (@molly0xFFF) August 15, 2023
Sept. 13–14: Binance.US cuts staff, CEO quits, and SEC responds
Sept. 19: Binance.US notches minor win against SEC
Binance.US scored a minor victory when the court denied the SEC access to the exchange’s software. Instead, the judge suggested that the SEC should be more specific in its discovery requests.
Sept. 21: Binance wants SEC suit tossed
Zhao, Binance and Binance.US asked the court to dismiss the SEC case against them. They claimed the SEC misinterpreted securities law and was imposing its authority retroactively. The SEC retorted that Binance had a “tortured interpretation of the law.”
Oct. 23: Binance wants CFTC suit tossed
Binance filed a motion to dismiss the CFTC’s suit. If the CFTC prevailed, it “would allow it to regulate any activity in cryptocurrency […] related to a derivatives product” worldwide, Binance said. “Congress did not make the CFTC the world’s derivatives police, and the Court should reject the agency’s effort to expand its territorial reach beyond what is permitted by the law,” it added.
Oct. 26: CZ’s wealth drops, Congress wants DOJ to strike
The Bloomberg Billionaires Index dropped Zhao from 11th place among the richest people in the world to a somewhat more modest 95th. His personal wealth was said to have been reduced from $96.9 billion to $17.3 billion. His standing had risen to 68th place by the November list, however.
The same day, Senator Cynthia Lummis and Representative French Hill called on the Justice Department to move against Binance and Tether for enabling sanctions evasion. This was two weeks after Binance froze accounts linked to Hamas.
Nov. 21: CZ and Binance indicted
The government filed indictments against Binance and Zhao in Washington state on Nov. 14. The documents were unsealed on Nov. 21, with Zhao stepping down from Binance as part of the deal.
The penalties totaled over $4 billion, including fines imposed on Zhao and Lim personally.
We’re pleased to share we’ve reached resolution with several US agencies related to their investigations.
This allows us to turn the page on a challenging yet transformative chapter of learning that has helped us become stronger, safer, and an even more secure platform.
— Binance (@binance) November 21, 2023