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

Experts Dorothy DeWitt and Michael Dawson discuss the implications, challenges, and potential outcomes of Binance's compliance monitorship.

Listen or watch all the new CoinDesk podcast episodes wherever you want.

ABOUT

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.

Listen to the episode on Apple Podcasts, Spotify, Overcast, Podcast Addict, Pocket Casts, Pandora, Castbox, Google Podcasts, Amazon Music, or on your favorite podcast platform.

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.

HOST

Laura Shin

Laura Shin is a crypto journalist, host of the Unchained podcast, and author of “The Cryptopians: Idealism, Greed, Lies, and the Making of the First Big Cryptocurrency Craze” (Public Affairs, 2022). Formerly a senior editor at Forbes, she was the first mainstream journalist to cover crypto full-time, and her podcasts and videos have had more than 15 million downloads and views. Shin has spoken about cryptocurrency at places such as TEDx San Francisco, the International Monetary Fund, Singularity University and the Oslo Freedom Forum.

She graduated Phi Beta Kappa with Honors from Stanford University and has a master of arts from Columbia University’s School of Journalism. She lives in New York City.