The U.S. Department of Justice is considering prosecuting the virtual currency exchange 'Binance' for fraud, and there are also cautious opinions over concerns about bank runs.
The U.S. Department of Justice is considering bringing charges of fraud against the virtual currency exchange Binance for deceiving consumers by operating an unregistered exchange and manipulating transactions. , the news site Semafor reported. If the virtual currency exchange, which has the world's largest daily trading volume, is indicted, it is expected that a bank run similar to FTX, which went bankrupt in November 2022, will occur and unrelated consumers will be harmed. Authorities are exploring ways to minimize the impact, including methods other than prosecution.
US prosecutors worry Binance charges could cause run on exchange | Semafor
Crypto Is Illegal in China. Binance Does $90 Billion of Business There Anyway. - WSJ
https://www.wsj.com/articles/crypto-is-illegal-in-china-binance-does-90-billion-of-business-there-anyway-2a0af975
Binance and its founder Changpeng Zhao were sued by the U.S. Commodity Futures Trading Commission in March 2023, and in June by the Securities and Exchange Commission for selling unregistered cryptocurrencies. He was also indicted by the SEC. In response to this, it was revealed in July that several senior executives at Binance had resigned.
It is reported that multiple senior executives have resigned from virtual currency exchange Binance, which is facing lawsuits from regulators - GIGAZINE
While regulatory authorities have been suing Binance one after another, judicial authorities have only investigated Binance on suspicion of tax evasion and sanctions violations, and have not made any notable moves. According to Semafor, the SEC often works with the Department of Justice to prosecute both civil and criminal matters at the same time, so cases like this one, which is especially high-profile, are when the SEC files civil lawsuits ahead of federal prosecutors. This is an unusual case.
The Department of Justice is said to be holding back on filing criminal charges against Binance because it is considering the impact on unrelated consumers and investors. In the first place, Binance, a gray zone virtual currency exchange, has already been blocked from access from within the United States, so in order to use it, you must use a VPN to avoid regulations.
For this reason, there is a view that ``the people who will be harmed by Binance's prosecution should have been aware of the risks from the beginning,'' but on the other hand, just because they use Binance with a VPN does not mean they are complicit in Binance's wrongdoing. There is also the view that this is not the case. In particular, virtual currencies are now considered mainstream in the financial system, and if a bank run occurs on one of the largest exchanges, there is a risk that panic will spread throughout the virtual currency market.
It has been pointed out that even if Binance is not indicted, it will only delay its inevitable collapse, and that if it shows a naive attitude, it could make the situation even worse, and there are disagreements among the judicial authorities regarding concrete measures. It's cracked.
US prosecutors are split over indicting virtual currency exchange ``Binance'' and its executives for money laundering and sanctions violations, and are discussing the possibility of a plea deal - GIGAZINE
According to people who provided information to Semafor, prosecutors are considering options other than prosecution, such as fines, suspension of prosecution, or non-prosecution through an agreement. It is unclear at the time of writing what kind of response the judicial authorities will take, but Semafor said, ``We will probably settle on a compromise solution that holds Binance accountable for the alleged criminal activity while limiting the harm to consumers.'' commented.
The United States is not the only country where Binance is suspected of conducting illegal transactions. The Wall Street Journal reported on August 2, 2023 that Binance trades $90 billion (approximately 13 trillion yen) of virtual currency-related assets a month in China, where virtual currency trading is illegal . This was revealed from internal documents.
The following is a graph of Binance's trading by country, divided into spot and futures, and shows that the trading volume in China is in first place, with a large difference over South Korea, which is in second place. You can see.
The Wall Street Journal said, 'China is Binance's largest market, accounting for 20% of global trading volume, excluding trades by some very large traders.'
Meanwhile, a Binance spokesperson told The Wall Street Journal, ``Binance.com is blocked in China and is inaccessible to users based in China,'' and said that Binance.com secretly conducts transactions in China. I denied that I was doing it.
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