Will Binance fail due to US lawsuit?
Original compilation: 0x11, Foresight News
Original compilation: 0x11, Foresight News
There is a lot of news going around about Binance, will Binance go out of business due to US lawsuits?
I don't think this is likely, and here's why I came to that conclusion (not financial or legal advice).
This articleThis article, detailing the alleged investigation into Binance:
Unauthorized money transfers;
money laundering conspiracy;
Violation of criminal sanctions.
This survey is from 2018.
“Binance’s weak anti-money laundering controls processed more than $10 billion in payments for criminals and companies seeking to evade U.S. sanctions and conspire to evade regulation in the U.S. and elsewhere,” the Reuters report said.
These are serious charges.
Binancedenies the accuracy of the Reuters report, CZ said the media had ulterior motives.
I have no reason to doubt Binance or CZ, especially given the favorable treatment of SBF by many media outlets. So my question is, what if Binance gets sued? What does this mean, will it be the end of Binance?
I don't think so, let's start with some key details. Since 2000, there have been 4,517 corporate lawsuits; only 56 have resulted in convictions at trial, or approximately 1.2%.
One of the reasons companies have sued so few is the "Andersen Effect," which describes the belief that the Justice Department's decision to sue Andersen in the wake of the Enron scandal led to Andersen's closure and some 28,000 jobs loss.
After Andersen, corporate prosecutions were "managed," and prosecutions typically proceeded in one of three ways:
plea agreement
deferred prosecution agreement
non-prosecution agreement
Plea deals allow the government to quickly convict and plead guilty. Courts will still sentence the company, but plea agreements typically give the company the right to challenge sentences that exceed the agreed-upon penalty.
Deferred prosecution and non-prosecution agreements are similar to probation. The government either agrees to delay prosecution (and ultimately not to file a lawsuit) or not to file a lawsuit at all, but only if the company complies with certain agreed-upon remedies.
These remedies can include:
fine
return of illegal proceeds
Enhanced Compliance Program
Hire external monitors to monitor compliance
regular review
In serious cases of corporate misconduct, the government can exert control over the remediation process and can obtain large fines. As any bank can tell you, a prosecution agreement puts the government inside the company.
So let's think about what would happen if the Reuters report was true? What are the possible solutions?
The government could try to shut down Binance by seeking a trial, which would detonate the entire cryptocurrency market. But it will take a long time to succeed, and even then it will only take Binance out of the US market.
If Binance were to be fully sued, it could lead to eventual bankruptcy, with substantial collateral damage to depositors, creditors, and employees. Many will be unhappy, crypto skeptics say, that the ills they want to avoid will happen all at once.
I think this is unlikely.
If the government can get a plea deal, a DPA, or an NPA, it could gain more access to the inner workings of much of the cryptocurrency market. The government may expand its reach beyond Binance US and use the monitors to better understand money laundering.
If money launderers and sanctions evaders see Binance as a favorable exchange, the U.S. government has an opportunity to step in at the crossroads and use monitors and other tools to tighten its currency controls.
The government can also claim hefty fines. The largest fines to date came from HSBC and JPMorgan, which were hit with huge fines for violating the Bank Secrecy Act, each between $1 billion and $2 billion.
With a hefty fine, the government can declare victory and find a way to take precedence over any lender.
An integral part of many corporate prosecutions is a promise to cooperate in any further prosecution of individuals involved in wrongdoing. If the government were to negotiate with Binance, the terms of the agreement would provide credit for the collaboration.
When faced with the choice of creating huge swings in pursuit of uncertain wins (or embarrassing losses) or the chance to gain real control over a company that hit $1.6 trillion in trade flows in a month, fools would choose the latter. By.
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