The exchange's strategy director reveals ongoing dialogue with regulators.
The world's leading cryptocurrency trading platform, Binance, has once again caught the attention of the regulatory sector. Patrick Hillmann, the company's strategy director, has announced that the company has taken steps to address the regulatory gaps that arose in its early years of operation and is willing to collaborate financially with regulators to close outstanding investigations.
"We are collaborating with regulators to determine the necessary corrective measures to address this situation. A fine is likely to be imposed, which could be larger, although we don't know yet. That will be decided by the regulators. I'm very confident and pleased with these conversations," stated Hillmann in an interview with The Wall Street Journal. The Binance executive also highlighted the collaborative attitude of US authorities and described a potential agreement as "a great breakthrough for the benefit of users."
Hillmann pointed out that Binance grew rapidly and started as a business led by software engineers who were not familiar with laws and regulations to deal with the risk of bribery and corruption, money laundering, and economic sanctions. The strategy director explained that the exchange's staff was overwhelmed as the company expanded internationally. "It's a tremendous burden. We just want to put this behind us," he added.
Binance, established in 2017 by Changpeng Zhao in China, is one of the most secretive companies in the industry. Its global headquarters is unknown, and Zhao has avoided clarifying the matter on multiple occasions, giving curious answers such as claiming that they are not based anywhere because bitcoin isn't either.
Recently, the exchange has been the subject of unfavorable news. According to various media outlets, the US Department of Justice (DoJ) is investigating the company for alleged money laundering, and its name has been linked to the now-closed Bitzlato exchange for allegedly moving $300 million in bitcoin. Bitzlato was a key part of a money laundering network that laundered over $700 million and was part of the darknet market Hydra.
In addition, the Commodity Futures Trading Commission (CFTC) has been investigating whether Binance offered cryptocurrency derivatives to US customers without properly registering that activity with the regulatory agency. Meanwhile, the Securities and Exchange Commission (SEC) has questioned the Binance USD stablecoin, licensed by Binance and issued by Paxos Trust.
In recent days, the SEC's regulatory focus has intensified, and it has fined Kraken $30 million for its staking services. According to some experts, these moves may have little to do with the SEC's position on stablecoins and staking, and much more to do with the accusations facing Zhao's company.
In recent days, Binance has temporarily suspended all transfers in US dollars and the company's director for Asia-Pacific has acknowledged that a full audit of the accounts will take "more time".
It's worth noting that Binance had a difficult time last December after a reserve test showed that its assets may not cover its liabilities. Although it stabilized after the initial scare, auditor Mazars announced that it would not work with any more cryptocurrency companies in the near future.
In recent years, Binance has significantly increased hiring in its regulatory compliance division, which is said to be close to 1,000 employees. Last December, in a company statement used to refute criminal investigation reports in the US, a senior executive at the company said that Binance had increased its compliance team by over 500%.