FinCEN cracks down on Bitzlato, Binance named counterparty

Binance, a major player in the cryptocurrency industry, was recently named one of the top three counterparties to Bitzlato, a crypto-to-crypto platform that has been accused of money laundering and other criminal activities, according to an order released by Financial. Crimes Enforcement Network (FinCEN).

This has raised concerns about the rules and regulations surrounding crypto exchanges and how they may be affected by the actions of major industry players such as Binance.

Background on FinCEN and the Bitzlato case

The Financial Crimes Enforcement Network (FinCEN), a branch of the US Treasury Department that oversees laws and regulations related to money laundering, terrorist financing and other financial crimes, recently issued an order against Bitzlato for violating the Bank Secrecy Act (BSA) regulations.

In December 2022, Bitzlato was charged with money laundering, terrorist financing and processing transactions for individuals and entities on US sanctions lists.

As a result, FinCEN imposed a $60 million civil monetary penalty on Bitzlato, and it was also revealed that the Department of Justice (DOJ) had arrested Anatoly Legkodymov, the founder of BitZlato. This highlights the serious consequences that can result from non-compliance with financial regulations and the importance of maintaining compliance for cryptocurrency exchanges and other financial institutions.

Binance was named one of the top 3 counterparties to Bitzlato in a money laundering investigative report released by FINCEN

What does this mean for Binance?

Binance has yet to respond to FinCEN’s order, but it is expected that the company will take the necessary steps to address the issues raised in the order. This could include strengthening their anti-money laundering (AML) and countering the financing of terrorism (CFT) measures, as well as improving compliance protocols to comply with US regulations.

As laws and regulations related to crypto exchanges become increasingly strict, Binance may have to consider the possibility of offering services to US customers.

The FinCEN order against Bitzlato and the naming of Binance as a counterparty has significant implications for the entire cryptocurrency industry. The cost of compliance is expected to rise as scrutiny of AML and CFT practices of exchanges increases.

As the crypto industry continues to grow and evolve, major exchanges like Binance must stay ahead of regulatory changes and take steps to ensure compliance with laws and regulations to maintain the integrity of the industry.