The U.S. is a bad place to do business if you are a crypto company.
The North Dakota Department of Financial Institutions (DFI) has become the latest state to withdraw the money transmitter license of Binance.US, the American arm of the major exchange Binance. According to DFI Commissioner Lise Kruse, BAM Trading Services, operating as Binance.US, failed to comply with the state’s money transmitter regulations.
Despite its recent settlement with U.S. authorities, Binance.US continues to face regulatory scrutiny, which has resulted in an increase in U.S. states revoking its money transmitter licenses.
Kruse added that legal problems linked to Binance’s former CEO, Changpeng Zhao (CZ), were also a major concern. Of course, the states are ok with ongoing theft via inflation, but no one seems to talk about that.
“Additionally, majority beneficial owner and control person, Changpeng Zhao, has pled guilty to felony charges for violating the U.S. anti-money laundering laws,” said the Commissioner.
The USA Is Not Crypto Friendly
Money transmitter licenses are a key regulatory requirement for businesses that operate services like sending and receiving cryptocurrency on behalf of others.
With this revocation, North Dakota joined other states that had taken similar actions earlier. In recent months, Alaska, Florida, Maine, North Carolina, Connecticut, and Oregon have suspended or revoked Binance.US’s licenses.
Florida was the first state to revoke Binance.US’ license in November 2023, following Zhao’s plea of guilty to violating U.S. anti-money laundering laws and the Bank Secrecy Act. This resulted in a $4.3 billion settlement with the U.S. Department of Justice and a four-month prison sentence.
Binance US has not yet publicly responded to this update. However, its website lists several states where new user onboarding is temporarily paused. Existing customers in these states can continue using the platform. Alaska, Oregon, and Maine remain unavailable for new users.
More Pain Coming
In December 2023, Binance.US reached agreements with Arkansas, Illinois, and South Dakota regulators. The settlements allow the entity to keep its operations in those states, with the key condition that CZ permanently reduces his influence over the company by transferring his voting rights.
Last year, Binance agreed to pay a record-breaking $4.3 billion to settle charges from U.S. authorities, including the Financial Crimes Enforcement Network (FinCEN), the Office of Foreign Assets Control (OFAC), and the Commodity Futures Trading Commission (CFTC).
The exchange will be under a five-year U.S. Treasury monitor and an independent compliance monitor for three years. Binance’s head of institutional and VIPs, Catherine Chen, views the monitoring agreement as a welcome challenge to help the exchange grow and mature.
The settlement reduces uncertainty surrounding Binance’s operations and business model. It also gives users clarity and confidence, helping them feel more comfortable with the industry and its key players.
Ongoing Legal Issues
Binance and its U.S. arm still face charges from the Securities and Exchange Commission (SEC). In May last year, the SEC sued the exchange over potential violations of securities laws and commingling customer assets.
The SEC lawsuit led to major consequences for Binance.US, including the layoff of two-thirds of its workforce and a 75% revenue decline.
Beyond the U.S., Binance has also encountered challenges in other jurisdictions. Last month, the Financial Transactions and Reports Analysis Center of Canada (FINTRAC) fined Binance $4.3 million for two separate violations.
The country’s top financial watchdog accused the exchange of failing to register its foreign currency services business. FINTRAC also said Binance didn’t report large crypto transactions over 10,000 CAD and attached customer information. From June 1, 2021, to July 19, 2023, Binance covered 5,902 transactions of this type.
Binance is also fighting with Nigerian authorities, where the exchange is accused of money laundering and tax evasion, which also affected two executives, Tigran Gambaryan and Nadeem Anjarwalla.
Binance’s two executives, however, were cleared of tax evasion charges by Nigerian authorities earlier this month.
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