Binance Crackdown Unleashes Unprecedented Scrutiny on Crypto Transactions

Source: Adobe / natali_mis

The recent crackdown on Binance by the US Department of Justice (DOJ) has triggered a seismic shift in how the crypto industry operates, with Binance now set to undergo what experts call an “unprecedented” level of scrutiny.

The government scrutiny, which Binance has agreed to in its settlement deal with the US government, will transform the exchange from “a haven for anarchic crypto commerce” to a meticulously monitored entity, Wired wrote in a report from earlier this month.

The settlement, considered one of the most substantial money-laundering settlements in the history of the US Justice Department, imposed a record-breaking $4.3 billion fine on the company.

Five years of user transaction history


Beyond financial penalties, the settlement mandated Binance to open its past books, and provide over five years of users’ transaction records to US regulators and law enforcement agencies, the Wired report noted.

This new era of radical transparency requires Binance to actively scrutinize its transactions from 2018 to 2022, and file so-called suspicious activity reports (SARs) for potential violations of US law during that period.

The SARs will be collected by FinCEN, the Treasury Department’s financial crimes division, and shared with various US law enforcement agencies.

‘Kind of crazy’ access


In the Wired report, one unnamed US prosecutor described the extent of the information Binance will share with the government as “kind of crazy,” while emphasizing the unprecedented level of government oversight.

“I don’t know what kind of business would want to operate while allowing that much government oversight, especially one that’s deliberately stayed out of the US so that they’re not under our nose,” the prosecutor said, adding:

“The other option must have been really bad.”

On the other hand, Binance’s chief compliance officer, Noah Perlman, expressed excitement about the opportunity to set a new compliance standard in the industry, reassuring users that their data would be kept “confidential,” meaning it would not be shared with any other parties than the US government.

While law enforcement and regulators have welcomed the move, advocates of financial privacy, including the Electronic Frontier Foundation (EFF), have expressed concerns about wholesale access to user data.Top of Form

“The fact that the transactions are made through cryptocurrency rather than through traditional financial channels indicates that the transactions are more likely to be sensitive, and that the person making the transaction may be turning to cryptocurrency precisely because of the privacy protection it provides,” the report quoted an earlier EFF statement as saying.

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