Semafor US Department of Justice considering fraud charges against Binance

US DOJ considering fraud charges against Binance.

Source: Semafor

Translation: LianGuaiBitpushNews Mary Liu

---

According to informed sources, officials from the US Department of Justice are considering bringing fraud charges against cryptocurrency exchange Binance, but are concerned about the potential “stampede effect” in the market.

The sources said that federal prosecutors are worried that if they prosecute Binance, it could lead to a run on the exchange, similar to what happened with the now-bankrupt FTX platform, resulting in consumer losses and causing panic in the cryptocurrency market.

• The Future of Worldcoin
• Has DeFi resumed business under the positive and negative news of regulation in 2023?
• A Quick Overview of the AA Smart Contract Wallet Launched by Europe Easy OKX

The sources said that prosecutors are considering other options, such as fines and deferred or non-prosecution agreements. This outcome would be a compromise, holding Binance accountable for alleged wrongdoing while minimizing harm to consumers.

This debate highlights the complexity and rapid development of cryptocurrency enforcement and regulation in the United States, where companies operate in legal gray areas and consumers lack any protections enjoyed by traditional banking systems.

The US Department of Justice declined to comment. Binance did not respond to requests for comment.

Some thoughts

In addition to facing charges from the Commodity Futures Trading Commission (CFTC), Binance and its founder Changpeng Zhao have also faced allegations from the US Securities and Exchange Commission (SEC). The SEC accuses Zhao and his company of operating an unregistered exchange in the US and intentionally allowing its citizens to participate in Binance’s offshore exchange. The SEC also accuses Binance of manipulating trading on its US platform through a secret market-making firm called Sigma Chain, misleading customers and investors.

Legal experts say that due to the seriousness of the charges, the SEC’s case against Binance is akin to a criminal indictment, increasing the possibility of criminal charges.

It is uncommon for the SEC to file civil lawsuits before federal prosecutors, especially in high-profile cases. The agency typically works in conjunction with the Department of Justice, filing both civil and criminal charges.

Reuters has extensively reported on how Binance circumvents US laws and regulations, leading to a criminal investigation by the US Attorney’s Office in Seattle in 2018.

When considering whether to bring charges against a large entity, the Department of Justice often has to weigh the impact on consumers, employees, and shareholders. This has been the case since the bankruptcy of Enron two decades ago.

The question is, should these factors be taken into account when dealing with cryptocurrency exchanges operating in legal gray areas? Those who trade on Binance and allege being deceived by the company’s strategies should be aware that they are taking on greater risks than those trading on regulated exchanges.

In order to access Binance.com, US citizens need to use VPN or other tools to bypass restrictions, but it is difficult to make Binance’s customers complicit in the company’s alleged misconduct. Cryptocurrencies have now become a mainstream part of the financial system.

In fact, the Department of Justice is discussing the potential impact of the indictment on consumers, which is to some extent a recognition of the legitimacy of cryptocurrencies.

Trade-offs

If there is enough evidence to support the charges, failing to prosecute Binance may only delay the inevitable collapse of the exchange. Ultimately, it may send a signal that the United States has a weak stance on cryptocurrency exchanges, inviting more misconduct in the future.

Economist Nouriel Roubini, famous for predicting the 2007-2008 housing crash, believes that the entire crypto ecosystem is corrupt and that “these participants should leave.”

US Senator Elizabeth Warren has also called for further criminal investigation of Binance, as the exchange is accused of lying to Congress. In an open letter to Attorney General Merrick Garland, Warren wrote, “These actions by Binance and Binance.US may violate federal laws that could result in fines and imprisonment for company executives.”

Regulatory agencies in the United States should also take responsibility, as they have created a vague and unstable regulatory environment for cryptocurrency companies operating within their borders, prompting many in the crypto industry to seek refuge in countries that welcome crypto enterprises.

On the other hand, lawmakers can protect consumers and make the United States a more attractive place by enacting new industry regulations that offer safer alternatives to offshore exchanges like Binance and FTX.

---

For more information, please join:

LianGuai Twitter: https://twitter.com/BitpushNewsCN

LianGuai TG Community: https://t.me/BitPushCommunity

LianGuai TG Subscription: https://t.me/bitpush

This article is from LianGuai: https://www.bitpush.news/articles/4825285, please indicate the source when reproduced.

We will continue to update Blocking; if you have any questions or suggestions, please contact us!