Rule Number One when it comes to business and finance, especially on a major international level is pretty simple... don't screw with the US Dollar. This includes anything that could be compared or correlated to the USD because I think it is safe to say that the US Government is very protective of the Dollar and its world reserve currency status. So if you are a centralized business (or exchange in this case) and you are dealing with anything correlated (ie pegged) to the US Dollar you better be extremely careful on who you let interact with those "dollars". This is where we have seen the largest banks and companies get in trouble before... they let sanctioned people or countries who should not have access to dollars touch dollars and this is where BINANCE messed up.
We do not have to go too far back in Binance's history to get to the point where they had admitted some of their employees had committed wrongdoings by telling people from sanctioned countries like Iran to use a VPN to access their platform and trade in whatever they wanted to. That admittance was going to lead to a nasty fine however because blockchains are transparent it did not take a ton of effort for US authorities to see that this was not a one-off or a thing that had ceased it was an ongoing issue. Binance thought it could get around the majority of the US regulation and authorities by launching Bianance.US but companies doing this (I am looking at your FTX) have shown us anything it is that no matter what is said those companies are interacting in some way or shape or form which they are not supposed to hence the creation of the .US versions.
Now on paper, it might look like Binance and CZ were royally hung out to dry by the US just looking at this settlement however, that isn't really the truth for a few reasons. First, Binance was not seized and shut down or forced into government controllership. As wild as it sounds the US Government has done that sort of thing more often than not for a whole heck of a lot less if we are being honest. Binance.US wasn't shut down which I will admit was likely the most surprising of all. While it was moved into a new special digital repository to be truly independent of Binance that is much better than a forced closure.
Second, CZ himself only had to pay a $50 million penalty and faces a max of 18 months in jail. It isn't the neverending saga where he could be arrested and the courts could drag it out and take years before his case would be heard. As a ton of people have highlighted before $50 million for him is small peanuts compared to the vast crypto fortune he has built up so his wealth is really pretty intact for when he gets out of jail. The fact that the US pointed out how he/Binance had made over $1.1 billion in fees with US customers $50 million is a super low fine. Binance's $4 billion fine is a lot and definitely will sting however when you look at how the BSC is going Binance is still in a healthy fantastic place. Not to mention Binance did not lose other regulatory licenses as part of this either so they are still able to freely operate.
The last point that I want to cover is one that we have heard about but is not nearly as well highlighted as the others mentioned above. That is this settlement allows for all the terrorist financing headlines to disappear as well. Again since most of the blockchains are public and can be linked to certain groups it is known that while it was a VERY VERY small amount Hamas, al Qaeda and the Islamic State of Iraq and Syria did use crypto and platforms like Binance to move funds. Well now that those charges are gone the idea of crypto funding terrorism can quickly fade away as well for the sake of the industry. It reminds me of Silk Road and how the industry is still years later dealing with the bad PR that was dealt to us for that. At the end of the day, the cash is the biggest dirty money facilitator in the world but no one in government or business wants to point that out because they do not have a solution to fix this.
For Binance and Binance users this was a tough blow but it wasn't a world-ender as it could have been if the US just kept pushing. Instead with the settlement that was reached both sides can move on and while it is not a ton the industry does by default get some clarity with this agreement.
Please know I am not a financial advisor and make sure you do your own research! If you enjoyed this article and would like to support me further below are a few referral links that if you used when signing up I would appreciate it! Also, follow me on Twitter @Cje95_
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