TLDR

  • Binance handled $1.7 billion in transactions, with $144 million occurring after its plea agreement.
  • Thirteen accounts flagged for illicit activity moved funds even following Binance’s settlement.
  • Ongoing questionable transactions cast doubt on Binance’s pledged governance improvements.
  • The 2023 settlement came after Binance neglected to report more than 100,000 suspicious transactions.

Despite pledging to strengthen controls as part of a $4.3 billion U.S. criminal settlement in November 2023, Binance allegedly permitted suspicious accounts to keep moving millions in cryptocurrency. A cluster of 13 high-risk accounts handled over $1.7 billion in transactions, with some funds transferred after the plea deal was signed. This development fuels new concerns about the efficacy of Binance’s promised governance and surveillance enhancements, casting doubt on its dedication to regulatory compliance.

Binance Let Suspicious Accounts Move Millions After $4.3B US Plea Deal

Binance, the globe’s leading cryptocurrency exchange, is reported to have let suspicious accounts continue transferring substantial amounts of money following its $4.3 billion plea agreement with U.S. authorities in late 2023.

An analysis of internal data by the Financial Times reveals that 13 accounts, identified for suspicious behavior, facilitated roughly $1.7 billion in transactions. Significantly, approximately $144 million of this total was moved after Binance had vowed to bolster its controls under the terms of the criminal settlement.

Even with the exchange’s assurances to reinforce governance and monitoring, the impact of these measures is under scrutiny. The group of 13 accounts participated in transactions connected to high-risk jurisdictions like Venezuela, Brazil, Syria, and China. These dealings were documented in internal records, such as Know-Your-Customer (KYC) files, device logs, and transaction histories.

Suspicious Account Behaviors Raise Concerns

One of the flagged accounts, linked to a Venezuelan woman, received more than $177 million across two years. A major warning sign was the account modifying its associated bank information 647 times in only 14 months. Specialists noted that such an extreme frequency of changes, particularly in this context, was abnormal and indicative of potential illicit money-moving schemes.

Another account, belonging to a junior bank employee in Caracas, was involved in around $93 million in transactions. Internal logs showed the account was accessed from Caracas and Osaka, Japan, in under 10 hours—a pattern experts say is physically implausible. Such an irregularity would normally prompt an automatic investigation at any regulated financial firm.

The persistent operation of these accounts after the plea agreement suggests systemic flaws in Binance’s monitoring infrastructure. Analysts emphasize that the clear warning signs should have led to deeper probes, especially given the scale of the detected suspicious activity.

Binance’s Promised Oversight Reforms in Question

After its criminal settlement with the U.S. government, Binance vowed to adopt more robust systems for identifying suspicious transactions. These commitments encompassed real-time monitoring, stricter due diligence procedures, and periodic reviews of customer accounts. However, the continued presence of suspicious activity calls into question whether Binance is successfully upholding these pledges.

Regulatory experts referenced by the Financial Times have expressed skepticism about Binance’s capacity to implement the required upgrades. One specialist stated that when dubious accounts can still transfer large volumes unimpeded, it implies the exchange’s governance structure is either insufficient or not operating as assured.

The accounts under scrutiny also received large amounts of the stablecoin Tether (USDt), which was later traced to wallets frozen by Israeli authorities pursuant to counter-terrorism legislation. This connection intensifies worries that Binance could be unintentionally enabling unlawful financial operations.

Binance’s Legal Commitments Under Scrutiny

The $4.3 billion criminal settlement represented a major milestone for Binance, coming after it was disclosed that the exchange did not report upwards of 100,000 suspicious transactions. These transactions were tied to criminal endeavors including ransomware attacks, narcotics trafficking, and transfers associated with terrorist organizations like al-Qaeda and ISIS.

The settlement also included a mandate for Binance to upgrade its internal safeguards to meet anti-money laundering (AML) and Know-Your-Customer (KYC) standards.

Despite these obligations, Binance’s failure to promptly curb the suspicious activities detailed in the Financial Times report undermines confidence in the actual effectiveness of its compliance initiatives. The persistence of high-risk transactions indicates continuing struggles for the exchange in policing and preventing illicit activities, even after its settlement with U.S. regulators.