Binance, the world's largest cryptocurrency exchange firm has been slapped with a $4.3 billion penalty for breaking the US anti-money laundering and sanctions laws. The company's Chief executive Changpeng Zhao also resigned and pleaded guilty to a criminal charge of failure to protect against money laundering.
The global trading platform is also under intense scrutiny for allegations of facilitating money laundering to groups like Hamas, Al Qaeda, and the Islamic State of Iraq and Syria (ISIS), Forbes reported. Binance failed to report more than 100,000 suspicious transactions with organizations designated as terrorist groups by the US.
In a press release, the Treasury Department wrote, ''The violations include failure to implement programs to prevent and report suspicious transactions with terrorists — including Hamas' Al-Qassam Brigades, Palestinian Islamic Jihad (PIJ), Al Qaeda, and the Islamic State of Iraq and Syria (ISIS).''
Binance allegedly ''turned a blind eye to its legal obligations in the pursuit of profit,'' Treasury Department Secretary Janet Yellen said in a statement, allowing ''money to flow to terrorists, cybercriminals, and child abusers through its platform.''
As per Reuters, Hamas uses a global financing network to funnel support from charities and friendly nations, including by using cryptocurrencies. Last month, researcher Elliptic said Palestinian Islamic Jihad received $93 million in crypto between August 2021 and June this year. Another firm BitOK said wallets linked to Hamas received about $41 million in a similar time period.
The link between Hamas and Binance first surfaced in February 2019, when Samuel Lim, Binance Holdings' then-chief compliance officer, admitted that the crypto exchange was being used to channel funds to Hamas, as per a Bloomberg report. During a chat with a colleague, Mr Lim revealed that Hamas operatives were using Binance for transactions involving relatively small sums of money. The colleague jokingly replied that ''[one] can barely buy an AK47 with 600 bucks.''
The US government's Commodity Futures Trading Commission (CFTC), which has been probing the case for years, alleged Binance did not enforce an effective anti-money laundering programme to detect terror financing.
The crypto sector's links to terror financing have been under renewed scrutiny following Hamas's attack on Israel last month. Israeli police said in an October 10 statement that it had frozen several crypto accounts that were used to solicit donations for Hamas. Reuters reported in May that Israel had seized around 190 crypto accounts at crypto exchange Binance since 2021, including dozens it said were owned by Palestinian firms connected to Hamas.
Notably, Crypto allows users to bypass banks by instantly transferring tokens between digital wallets, which are normally held at a cryptocurrency exchange. For transactions, Hamas and other groups primarily used the stablecoin tether, which is pegged to the US dollar, avoiding the volatility that affects other tokens, as per a report by the Washington Post.
