Binance, a major player in the cryptocurrency industry, was recently named as one of the top three counterparties of Bitzlato, a crypto-to-crypto platform that has been accused of money laundering and other criminal activities, according to an order released by the Financial Crimes Enforcement Network (FinCEN).
This has raised concerns about the rules and regulations surrounding crypto exchanges and how they may be impacted by the actions of major industry players like Binance.
The Financial Crimes Enforcement Network (FinCEN), a branch of the U.S. Department of the Treasury that oversees laws and regulations related to money laundering, terrorist financing, and other financial crimes, recently issued an order against Bitzlato for violations of the Bank Secrecy Act (BSA) regulations.
In December 2022, Bitzlato was charged with money laundering, terrorist financing, and processing transactions for individuals and entities on U.S. sanctions lists.
As a result, FinCEN imposed a civil money penalty of $60 million on Bitzlato, and it was also revealed that the Department of Justice (DOJ) had detained Anatoly Legkodymov, the founder of BitZlato. This highlights the severe consequences that can result from non-compliance with financial regulations and the importance of maintaining compliance for cryptocurrency exchanges and other financial institutions.
Binance was named as one of the top 3 counterparties of Bitzlato in a money laundering investigation report released by FINCEN
Binance has yet to respond to FinCEN’s order, but it is expected that the company will take the necessary steps to address the issues raised in the order. This may include strengthening their anti-money laundering (AML) and countering the financing of terrorism (CFT) measures, as well as enhancing compliance protocols to adhere to U.S. regulations.
As laws and regulations related to crypto exchanges become increasingly strict, Binance may need to consider the feasibility of providing services to U.S. customers.
The FinCEN order against Bitzlato and the naming of Binance as a counterparty has significant implications for the entire cryptocurrency industry. The cost of compliance is expected to rise as scrutiny for AML and CFT methods of exchanges increases.
As the crypto industry continues to grow and evolve, major exchanges such as Binance must stay ahead of regulatory changes and take steps to ensure compliance with laws and regulations in order to maintain the integrity of the industry.
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