SAN FRANCISCO: The chief strategy officer of Binance, the biggest cryptocurrency exchange in the world, said in an interview that the company anticipates paying fines to resolve ongoing regulatory and law enforcement inquiries into its operations in the United States.
Binance quickly expanded and started as a company run by software engineers who were not aware with the laws and regulations intended to combat the risk of bribery and corruption, money laundering, and economic sanctions, Patrick Hillmann said. He said that although the corporation has been striving to close any holes in its early compliance efforts, it still anticipates that regulators will levy fines for previous behaviour.
The corporation is "working with regulators to figure out what are the remediations we have to go through now to make up for that." The result will "probably be a fine, but could be more... We just don't know. Regulators will decide on that, Mr. Hillmann said.
Binance is one of several prominent exchanges facing scrutiny in the U.S. over its crypto offers. The exchange, which doesn't have a headquarters worldwide, started operating in China in 2017. After China outlawed cryptocurrency exchanges, its leadership team, including founder and CEO Changpeng Zhao, spent time there. According to Mr. Hillmann, U.S. traders are not now able to use Binance.
Although the prices of crypto stocks and currencies soared together on Wednesday, regulatory concerns have been weighing on cryptocurrency prices in recent weeks.
According to the people familiar with the matter, it said, the Justice Department has been looking into Binance over possible contraventions of American anti-money laundering legislation. The Commodity Futures Trading Commission is looking into whether Binance marketed cryptocurrency futures to customers in the United States without legally notifying the CFTC of such a transaction.
Mr. Hillmann said that he was unable to predict the number of fines or the potential timeline for Binance and U.S. authorities to come to an agreement, but added that the exchange is "very optimistic and feeling pretty positive about the direction those negotiations are heading." For our business, "it will be a nice moment since it allows us to put everything behind us," said Mr. Hillmann. It is still "very perplexing moment for us" to comprehend how American regulators intend to monitor the cryptocurrency market. In recent months, the Securities and Exchange Commission has stepped up its own enforcement, blocking access to goods and services essential to the cryptocurrency industry, he said.
One of the largest U.S. exchanges, Kraken, agreed last week to settle a civil inquiry into its staking investment programme by paying the SEC $30 million in fines. Although Kraken did not confirm or deny wrongdoing, it did agree to discontinue providing staking to American users. Staking enables investors to generate a return by temporarily transferring control of their cryptocurrency tokens to a middleman or a cryptocurrency network.
According to The Wall Street Journal this week, the SEC has informed Paxos Trust Co. that regulators want to take enforcement action against Paxos over the release of BUSD, a stablecoin bearing Binance's name. BUSD is a coin that Paxos creates under a licence that allows Binance to use the "B" in its name.
BUSD, which state regulators had previously allowed to be created and referred to as a virtual currency, was stopped from being issued on Monday by New York regulators. According to Paxos, the SEC staff's analysis of BUSD is incorrect, and the business intends to challenge the federal government if it charges Paxos with breaking investor protection rules.
The recent SEC enforcement action "would have an extremely significant and long-lasting chilling effect in the United State said Mr. Hillmann.
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