- The Department of Justice slapped Binance with a hefty fine.
- Richard Teng addresses concerns about Binance’s ability to stay afloat.
- Teng assures the community that Binance is financially strong.
Binance’s troubles with US authorities reached a crescendo on November 21 as the exchange agreed to a record $4.3 billion settlement with the Department of Justice (DoJ). As part of the agreement, Binance would withdraw from the US market, and CEO Changpeng Zhao was forced to resign, pleading guilty to violating money laundering rules.
Approaching two weeks since the bombshell settlement, uncertainty still looms about whether Binance can continue operating given the size of the fine. However, new CEO Richard Teng told users “don’t worry” about the fine during a recent AMA.
Binance in Strong Financial Shape
During a recent AMA, Teng was asked about the company’s ability to pay the fine and whether it can afford it. In response, Teng emphasized that the company is financially robust despite the fine and remains profitable as it has always been since day one.
“We have robust profits and revenue, so on that front, not to worry, we are in strong financial shape,” stated Teng.
Highlighting the company’s financial health, Teng stated that Binance is debt-free and has modest expenses. Despite the bad press associated with the DoJ incident, Teng also mentioned that Binance retains its position as the biggest crypto exchange by trading volume. According to CoinMarketCap, the latest 24-hour trading volume places Binance number one for spot and derivatives trading.
In a bid to normalize the fine, Teng stated that “fines of this magnitude are not uncommon in the financial sector,” but the company’s focus is on learning from what happened and moving forward.
Biggest Corporate Fines
Binance’s fine pales compared to the biggest fines in US corporate history. Due to their involvement in the subprime housing crisis, Bank of America was fined a combined $30.6 billion, while JPMorgan settled with the DoJ for $13 billion. While BNP Paribas paid nearly $9 billion for illegally processing transactions in sanctioned countries like Sudan and Iran.
Nonetheless, Binance’s $4.3 billion fine still represents the largest penalty levied against a crypto firm in US corporate history.
On the Flipside
- There are ongoing concerns that Binance would dip into user funds to pay the fine; Teng did not address this directly in the AMA.
- The fine relates more to procedural or registration violations than major fraud or wrongdoing.
- Binance has faced previous scrutiny for certain product offerings and compliance gaps but retains user trust, as evidenced by its dominant trading volume.
Why This Matters
US authorities have fined Binance and delivered a clear message to other crypto firms to play by their rules or suffer the consequences. However, some complain that the rules haven’t been clarified, making operating in the US a risky affair for blockchain innovators set on building an American market.
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