US Implicates Binance in Iranian Sanctions Violations, Terror Funding
The United States has imposed a record $4.4 billion fine on Binance, the world’s largest cryptocurrency exchange, for allegedly violating Iran sanctions and funding terrorism. The US Department of Justice, Treasury, and Commodity Futures Trading Commission accused Binance of enabling the laundering of illicit funds worldwide.
Allegations and Indictment
According to the indictment, Binance enabled money laundering, aided terrorist networks like Hamas and the Palestine Islamic Jihad (PIJ), and violated sanctions on countries such as Cuba, Iran, Russia, and Syria. The platform was also accused of playing a role in human trafficking and narcotics trade.
Criticisms from US Treasury Secretary
US Treasury Secretary Janet Yellen criticized Binance, stating that it “turned a blind eye to its legal obligations in pursuit of profit.” Crypto wallets at Binance were found to interact with bitcoin wallets associated with groups designated as terrorist organizations by the US and several other countries, including the Islamic State and al-Qaeda.
Transactions and Facilitation
The indictment revealed that Binance facilitated over $1 billion in transactions with sanctioned countries and criminal actors. The platform processed 1.1 million crypto transactions worth at least $898.6 million between US customers and those who lived in Iran from January 2018 to May 2022.
CEO’s Plea and Potential Sentence
Binance’s CEO, Changpeng Zhao, stepped down and pleaded guilty to breaking criminal US anti-money laundering laws as part of the settlement resolving a years-long probe into the crypto exchange. He faces a possible prison sentence of between 10 and 18 months.
Continued Services to Sanctioned Countries
The investigation found that Binance continued to serve thousands of users from sanctioned countries, including over 12,500 users who provided Iranian phone numbers. In 2022, Reuters cited blockchain data indicating that the crypto giant has processed Iranian transactions with a value of $8 billion since 2018 despite US sanctions intended to cut Iran off from the global financial system.
Challenges in Tracking and Preventing Illicit Activities
The case highlights the challenges in tracking and preventing cryptocurrency transactions linked to terrorist organizations and sanctioned countries. The lack of transparency and anonymity in the cryptocurrency market makes it difficult for authorities to distinguish between legitimate and illicit activities.
References
- Reuters: “Binance processed $8 billion in Iranian transactions despite US sanctions” (2022)