Binance moves nearly $4 billion amidst US DoJ demand to end years long investigation

  • Binance has recently moved $3.9 billion USDT to its hot wallet, marking the eighth largest Tether transaction on Tron. 
  • The US DoJ is seeking over $4 billion from Binance to end its investigation, according to a Bloomberg report.
  • The SEC filed a lawsuit against Kraken on Monday, signaling that the US regulator continues its crackdown on crypto exchanges.

Binance is currently facing one of the largest investigations that the US Department of Justice has ever conducted into a cryptocurrency firm, according to a Bloomberg report. While negotiations between the two parties continue, a Bloomberg report claims that the US Department of Justice (DoJ) seeks more than $4 billion from the exchange to end its years-long investigation.

The US DoJ is probing Binance’s alleged involvement in money laundering, bank fraud, and sanctions violations among other charges.

In this context, twelve days ago Binance moved $3.9 billion USDT on Tron, from its cold wallet to a hot wallet, raising alarm among crypto market participants. This transaction is the eighth largest one to occur on the Tron blockchain. It is likely that the fund transfer is a coincidence, but the transaction has sparked speculation among market participants as it is similar to the US Justice Department’s alleged demand to settle the case.

Also read: XRP price could rally 10% higher with institutional interest in Ripple funds

US DoJ seeks more than $4 billion from Binance: Bloomberg

According to a November 20 Bloomberg report, Binance faces a $4 billion demand from the US DoJ. The Justice Department is seeking these funds to end its investigation into the exchange platform. The report states that a resolution is expected as early as the end of the month, and failure to settle could result in Binance founder and CEO Changpeng Zhao (CZ) facing criminal charges in the US.

In March, the Commodity Futures Trading Commission (CFTC) alleged that Binance and CZ routinely violated US derivatives rules. In June, the Securities and Exchange Commission (SEC) had filed a lawsuit accusing Binance and Changpeng Zhao for mishandling customer funds, misleading investors and regulators and violating securities laws.

The Justice department’s investigation is led by money laundering and asset recovery, national security divisions and the Seattle US Attorney’s office. If Binance settles with the Justice Department, paying more than $4 billion in fines, it would mark one of the largest penalties in a criminal crypto case.

A settlement would allow Binance to continue operations, rather than trigger a collapse that would have a ripple effect on the crypto ecosystem and its users. Binance has the option of a deferred-prosecution-agreement, which would open the exchange to criminal charges and the exchange would pay a substantial penalty and produce a statement outlining its wrong actions.

Binance has also been under scrutiny for evasion of US sanctions against Iran and Russia, and financing Hamas, according to Bloomberg. 

Binance moves $3.9 billion USDT to hot wallet

Binance recently (12 days ago) moved $3.9 billion USDT on Tron from its cold wallet to hot wallet. The transfer was recorded on the blockchain. Binance didn't immediately respond to FXStreet's request for comment about the transaction. Some market participants are speculating that the move could be related to the DoJ’s alleged demand of over $4 billion to settle the case.

Binance transfers $3.9 billion USDT

Binance transfers $3.9 billion USDT among its wallets

If the transfer is related to DoJ’s demand, it means that the exchange is preparing to settle with the Justice Department, likely shielding the crypto ecosystem from the fallout of Binance. 

Meanwhile, US regulators’ crackdown on crypto exchanges continues. The SEC sued Kraken on Monday, accusing the exchange of running an unregistered national securities exchange. Co-founder Jesse Powell condemned the SEC’s move and said that the exchange had previously settled charges for $30 million in February.

The SEC was also heavily critiqued by Ripple and Coinbase legal officers, which have also been in the regulators’ spotlight.

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