For years, Binance founder Changpeng Zhao and other senior employees at the cryptocurrency exchange knew that some of its users were criminals. Despite regular warnings from some of its own employees that some transactions on Binance.com were violating anti-money-laundering laws, the firm was reluctant to cut them off. Those allegations, made public Tuesday in a federal case against Binance and Zhao, show how thoroughly he and his deputies understood that criminals were using their platform — and how little they did to stop them, reports the New York Times. In many cases, they worked hard to keep the Financial Crimes Enforcement Network, an arm of the Treasury Department that fights money laundering and other illicit financial transactions, from learning about their most notorious users. Zhao and Binance pleaded guilty on Tuesday to violations of the Bank Secrecy Act and agreed to pay hefty fines.
In April 2019, representatives from a technology company working with Binance reached out a Zhao deputy to report that Hamas’s military wing, the Qassam Brigades, was fund-raising for “Palestinian resistance” by soliciting Bitcoin donations, and that it had received funds through transactions on Binance.com. The Binance official acknowledged the report and tried to persuade the tech company to downplay Binance’s role in the transactions. Law Prof. Carl Tobias of the University of Richmond said the government’s actions against Binance were designed in part to send a message to the rest of the crypto industry about the consequences of failing to follow U.S. laws. Ordinary people who tried to participate in the industry suffered big losses and watched as one of crypto’s most prominent figures, Sam Bankman-Fried, the founder of the FTX exchange, was outed as a fraudster. “The question is: Is there potential for crypto to regain any public trust?” Tobias said.