In a development that has stirred relief among cryptocurrency investors, Binance, the major crypto exchange, is on the brink of resolving a prolonged US criminal investigation. Crypto enthusiasts are optimistic that any agreement allowing Binance to continue its operations would eliminate a lingering threat to the broader market. According to sources familiar with the matter, the US Justice Department (DOJ) is pursuing a settlement that entails Binance paying over $4 billion.
Bloomberg reported this on Monday, citing individuals knowledgeable about the ongoing discussions. An insider close to the investigation informed Reuters that the probe is approaching its culmination, hinting at a potential announcement on the resolution by the end of the month, as per Bloomberg.
Binance and DOJ Settlement Impact: Despite the news, Bitcoin, the leading cryptocurrency and a market sentiment indicator, remained largely unaffected. On Tuesday, it was trading down about 2.6%. In contrast, Binance’s native token, BNB, the fourth-largest digital coin, surged 4.6% on Tuesday, building on gains of up to 6% from the previous day.
Market analysts interpret this reaction as a sign of confidence that a $4 billion payment would be within Binance’s means. Four crypto investors and market participants suggest that such a settlement with the DOJ could enable Binance to continue operations, averting a market sell-off triggered by any abrupt unwinding, according to two sources.
Anatoly Crachilov, CEO of London-based Nickel Digital Asset Management, a Binance client, expressed positivity about the news. He stated, “We see this news as a positive development,” emphasizing that a $4 billion settlement with DOJ is potentially manageable for Binance, citing publicly available information on trading volumes and commissions as evidence of substantial revenue generation.
As a private company, Binance does not disclose fundamental financial details like revenue and profit, making the exact extent of its cash reserves unknown. Nevertheless, it has asserted that it is both profitable and debt-free. Requests for comments from Binance and the DOJ remained unanswered at the time of reporting.
The DOJ’s investigation into Binance and its CEO Changpeng Zhao dates back to at least 2018, covering potential charges such as money laundering conspiracy and criminal sanctions violations, as reported by Reuters last year.
Despite a decline in market share this year, Binance has maintained a dominant position in the crypto sphere. Last month, it controlled approximately a third of crypto spot and half of derivatives trading, according to CCData. The persisting regulatory and legal challenges facing Binance have long been a concern for investors, impacting the wider market.
A string of incidents, including the U.S. Securities and Exchange Commission’s lawsuit in June alleging evasion of federal securities laws, led to market fluctuations. Binance, however, has consistently denied the SEC’s allegations.
Sui Chung, CEO of crypto index provider CF Benchmarks, highlighted that resolving the DOJ probe would eliminate the risk of Binance’s sudden collapse, stating, “Binance disappearing overnight remains a potential systemic risk to the crypto market.” Chung emphasized that an orderly settlement would mitigate concerns.
Some investors pointed to the personal wealth of Changpeng Zhao as a potential safety net. Samed Bouaynaya of Altana Digital Assets Fund, based in London, commented, “This can easily be swallowed by CZ himself,” indicating confidence in Zhao’s financial capacity to cover any settlement with the DOJ.
Source: Reuters
