How Binance Will Open All Its Activity to the U.S. Government

The record $4.3 billion settlement reached between Binance and the U.S. government over charges of money laundering and sanctions violations calls for the world's largest crypto exchange to maintain an independent compliance monitor for the next five years. Michael Dawson, a partner at WilmerHale, and Dorothy DeWitt, founder and CEO of Tolt Strategies, a former director at the CFTC and former general counsel at Coinbase, dissect the intricacies of this arrangement, delving into the roles and responsibilities of the compliance monitor, the potential impact on Binance's operations and the broader implications for the crypto industry.

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Show highlights |

• What exactly is a compliance monitor, and why it's essential in the Binance settlement
• Which regulatory agencies the monitors report to and their significance
• Why the DOJ insisted on including a compliance monitor in its settlement with Binance
• how Binance’s compliance monitor is expected to create a “ripple effect across the industry,” according to Michael
• Why Binance, despite being a non-U.S. entity, is subject to a U.S.-appointed monitor
• Dorothy's perspective on why more monitorships might be appointed in the crypto industry going forward
• How much the monitorship will cost Binance and the factors influencing their choice of monitor
• Whether the government will be able to discover other crimes with all this new information, which will be used by other agencies such as the IRS and the FBI
• Who might be appointed as the compliance monitor for Binance and why Michael favors Patrick McHenry
• What constitutes the SAR lookback and AML program consultancy
• What could happen when the government gets to look at all past transactions
• What happens if the monitor discovers any wrongdoing within Binance
• Whether the monitorship is likely to impact Binance's business operations
• Advice from Dorothy and Michael for Binance's new CEO on navigating these challenges
• Why predicting the future of Changpeng Zhao, Binance's ex-CEO, is complex, according to Dorothy
  

Thank you to our sponsors! LayerZero | Popcorn Network | Arbitrum Foundation

Guests |

Michael Dawson, partner, Financial Institutions Group at WilmerHale

Dorothy DeWitt, founder and CEO of Tolt Strategies and former Director of the Division of Market Oversight at the CFTC

Links |

Settlement

DOJ Settlement Text

FINCEN Settlement Text

CFTC Settlement Text

OFAC Settlement Text

WSJ: Binance Penalties Include a Number of Crypto Industry Firsts: The Treasury Department’s FinCEN is imposing its first-ever monitorship on the cryptocurrency exchange

CoinDesk: Binance's Future and Other Questions Post-Settlement

Unchained: Binance to Pay $4.3 Billion to Settle U.S. DOJ Criminal Probe; CEO Changpeng Zhao Pleads Guilty for Violating Bank Secrecy Act

Law360: Binance's Compliance Chief Is Optimistic About Monitorship

The CFTC’s guidance on monitorships

CFTC Releases Enforcement Advisory on Penalties, Monitors and Admissions

Other monitors at crypto companies

Coinbase (independent monitor): Press Release- January 3, 2023: Superintendent Adrienne A. Harris Announces $100 Million Settlement with Coinbase, Inc. after DFS Investigation Finds Significant Failings in the Company’s Compliance Program | Department of Financial Services

Robinhood Crypto (independent compliance consultant): Press Release- August 2, 2022: DFS Superintendent Harris Announces $30 Million Penalty on Robinhood Crypto for Significant Anti- Money Laundering, Cybersecurity & Consumer Protection Violations | Department of Financial Services (ny.gov)

Unchained Podcast is Produced by Laura Shin Media, LLC. Distributed by CoinDesk. Senior Producer is Michele Musso and Executive Producer is Jared Schwartz.