BinanceUS Encounters Issues with Revocation of Licenses by Multiple States
The United States is proving to be a challenging environment for crypto companies looking to do business. The North Dakota Department of Financial Institutions (DFI) has recently joined the ranks of states revoking the money transmitter license of Binance.US, the American branch of the well-known exchange Binance. This decision was made due to BAM Trading Services, operating as Binance.US, failing to adhere to the state’s money transmitter regulations, according to DFI Commissioner Lise Kruse. This is just one of the many regulatory hurdles that Binance.US has been facing, despite a recent settlement with U.S. authorities.
The legal issues surrounding Binance’s former CEO, Changpeng Zhao (CZ), have also been a cause for concern for the states. While the ongoing theft via inflation seems to go unchecked, the scrutiny on Binance.US continues to grow.
Money transmitter licenses are an essential regulatory requirement for businesses offering services such as sending and receiving cryptocurrency on behalf of others. With North Dakota’s revocation, other states have also taken similar actions. Alaska, Florida, Maine, North Carolina, Connecticut, and Oregon have all either suspended or revoked Binance.US’s licenses.
The revocation in Florida came after Zhao pleaded guilty to violating U.S. anti-money laundering laws and the Bank Secrecy Act, resulting in a $4.3 billion settlement with the U.S. Department of Justice and a four-month prison sentence. Binance.US has not publicly responded to the latest update, but its website indicates that new user onboarding is temporarily paused in several states, including Alaska, Oregon, and Maine.
Despite these challenges, Binance.US reached agreements with regulators in Arkansas, Illinois, and South Dakota in December 2023, allowing it to continue operations in these states with the condition that CZ reduces his influence over the company by transferring his voting rights.
Last year, Binance agreed to a record-breaking $4.3 billion settlement with U.S. authorities, including the Financial Crimes Enforcement Network (FinCEN), the Office of Foreign Assets Control (OFAC), and the Commodity Futures Trading Commission (CFTC). This settlement also brought about a five-year U.S. Treasury monitor and an independent compliance monitor for three years. Binance’s head of institutional and VIPs, Catherine Chen, sees this monitoring agreement as a positive step to help the exchange grow and mature.
However, Binance and its U.S. arm are still facing charges from the Securities and Exchange Commission (SEC) over potential violations of securities laws and commingling customer assets. This lawsuit has led to significant consequences for Binance.US, including a 75% revenue decline and the layoff of two-thirds of its workforce.
Beyond the U.S., Binance has faced challenges in other jurisdictions as well. The Financial Transactions and Reports Analysis Center of Canada (FINTRAC) recently fined Binance $4.3 million for two separate violations, accusing the exchange of failing to register its foreign currency services business and not reporting large crypto transactions over 10,000 CAD with customer information.
Binance is also dealing with accusations of money laundering and tax evasion in Nigeria, affecting two executives, Tigran Gambaryan and Nadeem Anjarwalla. However, the executives were cleared of tax evasion charges by Nigerian authorities earlier this month. Despite these challenges, Binance is continuing to navigate the complex regulatory landscape as it strives to maintain its operations and uphold its business model.
