US Regulators Will Now Have Access to Years of Binance Transaction Data
Freeman writes:
One attraction of Binance, as the company grew from its 2017 founding into the biggest cryptocurrency exchange in the world, was the firm's freewheeling flouting of rules. As it amassed well over 100 million crypto-trading users globally, it openly told the United States government that, as an offshore operation, it didn't have to comply with the country's financial regulations and money-laundering laws.
Then, late last month, those years of brushing off US regulators caught up with the company in the form of one the most punitive money-laundering criminal settlements in the history of the US Justice Department.
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When the Department of Justice announced on November 21 that Binance's executives had agreed to plead guilty to criminal money-laundering charges, much of the attention on that settlement focused on founder Changpeng Zhao giving up his CEO role and on the company's record-breaking $4.3 billion fine. But Binance's settlement agreements with the DOJ and the US Treasury Department also stipulate a strict new regime of data-sharing with law enforcement and regulators.
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Digital civil liberties nonprofit the Electronic Frontier Foundation, too, has historically called on cryptocurrency exchanges to stop giving up users' transaction data to law enforcement and regulators without notifying those users. Now, the Binance settlement would create perhaps the most extreme case yet of that crypto exchange data-sharing, giving the US government wholesale access to the records of a crypto hub that at some points processed billions of transactions a day.
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US law enforcement has proven that even troves of exchange data that lack users' names can nonetheless be highly revealing of their financial history-especially in combination with blockchain data and information from other exchanges that usually do comply with know-your-customer laws. In the case of the Welcome to Video child sexual abuse materials dark-web site in 2017, for instance, one alleged abuser was identified and arrested after his email address was tied to an account on the cryptocurrency exchange BTC-e, which authorities had seized months earlier.In another case, BTC-e's data allowed IRS criminal investigators to identify a hacker who had taken nearly 70,000 bitcoins from the Silk Road dark-web drug market-worth more than $3 billion today-and then track them down and seize the funds.
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