In February 2019, Binance Holdings Ltd.’s then-Chief Compliance Officer Samuel Lim acknowled
ged that the cryptocurrency exchange was being used to funnel money to Hamas, explaining to a colleague that terrorists normally sent “small sums.”
Hamas could “barely buy an AK47 with 600 bucks,” the colleag
ue responded in a chat message, according to the US Commodity Futures Trading Commission’s March lawsuit against the world’s largest crypto exchange.
That apparently nonchalant attitude caught up with Binance and its chief executive officer, Changpeng Zh
ao, on Tuesday. In announcing $4.3 billion in fines against the company and a guilty plea by Zhao for failing to comply with a
nti-money-laundering laws, the US government put Hamas and other t
errorist organizations front and center. The broad settlement also resolves the CFTC suit.
US Is Seeking More Than $4 Billion From Binance to End Case
“Binance enabled a range of illicit actors to transact freely on the platform,” the Treasury Department sa
id in a statement that named Hamas, Al Qaeda, Palestinian Islamic Jihad a
nd the Islamic State of Iraq and Syria as terrorist organizations that received funds through the exchange.
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Binance’s settlement and Zhao’s guilty plea come as Hamas is embroiled in a war with Israel, sparked by the g
roup’s Oct. 7 attacks that killed more than 1,200 people, with more than 2
00 taken hostage. Israel responded by invading Gaza, where thousands more have been killed.
In a press conference, US Attorney General Merrick Garland said Zhao “willfully violated federal law that
requires financial institutions to guard against money laundering and terrorist financing.”
Cavalier Attitudes
According to the government, Binance failed to report suspicious transactions with terrorists. As part of its settle
ment, the company will have to file those reports going forward and review past activity it should have disclosed.
“This will advance our criminal investigations into malicious cyber activity and terrorism fundraising, including the use of cr
yptocurrency exchanges to support groups such as Hamas,” Garland said.
Treasury’s Financial Crimes Enforcement Network will receive $3.4 billion of the fines paid by Binance, while its O
ffice of Foreign Assets Control will get $968 million. The FinCEN fine is the largest in that bureau’s history.
A number of cryptocurrency entrepreneurs have expressed cavalier attitudes about terrorists or other bad actors
using their platforms. BitMEX co-founders Arthur Hayes, Benjamin Delo and Samuel Reed last year pleaded guilty to willfully
failing to implement anti-money-laundering and customer identification policies at their crypto derivatives exchange.
Former Ethereum Foundation researcher Virgil Griffith was sentenced last year to more than five years in prison for participating in a 2019 blockchain an
d cryptocurrency conference in North Korea. At the conference, Griffith discussed how North Korean money might b
e converted into cryptocurrency as a way to evade sanctions. Photos showed him dressed in a North Korean-style uniform, standing in front of a whiteboard on whic
h he drew a smiley face and wrote “No sanctions yay.”