Today, we are pleased to inform you that Binance has reached an agreement with the U.S. Department of Justice (DOJ), Commodity Futures Trading Commission (CFTC), Office of Foreign Assets Control (OFAC), and the Financial Crimes Enforcement Network (FinCEN) with respect to these authorities' investigations into historical registration, compliance and sanctions matters. This agreement recognizes our company's liability for compliance violations and allows Binance to turn the page on a difficult but transformative chapter full of learnings and lessons. As part of the planned compliance and governance improvements materialized in our commitments, we can begin to unveil our optimism and vision for Binance for the future, as well as the promising outlook for the cryptocurrency industry. We are confident that Binance will emerge from this episode stronger as we lay the foundation of our business for the next 50 years.
Although Binance is not a perfect exchange, it has strived to protect its users since its beginnings as a small startup and has made considerable efforts to invest in security and compliance. However, when it launched, Binance did not have compliance controls in place for the company it was becoming, even though it should have put these controls in place. Binance grew at an extremely rapid pace globally, in a new and evolving industry that was only in the early stages of regulation, and made some ill-advised decisions along the way. Today, Binance takes responsibility for this past chapter.
Over the past two years, we have worked hard to restructure our organization and upgrade our systems. We have established new leadership with deep compliance experience and an impressive background, spanning from the largest traditional financial institutions to leading technology companies and enforcement departments. law and big business. It is through this process that we have become a stronger, safer and even more secure platform for our users.
Just as importantly, we have never wavered from our core values of user safety and security. We take our responsibility as a custodian very seriously and maintain 1:1 coverage for each user asset*, meaning users can withdraw 100% of their assets from the platform at any time.
It should be noted that the agreement with American agencies:
does not claim or indicate that Binance misappropriated user funds, and
does not claim or indicate that Binance participated in market manipulation.
Our team of global leaders has positioned Binance for long-term growth. Our business is focused on protecting our users and building a platform for decades to come. This focus and experience gives us additional resilience that allows us to continue operating on behalf of our users not only for the next five years, but also for the next fifty years or more. Our former CEO remains the majority shareholder of Binance and an available resource for consultation on historic areas of our business.
Positioning yourself for the next fifty years means understanding the industry's current challenges and working to develop cutting-edge standards to meet them, particularly in the areas of compliance, security, cooperation with law enforcement and transparency for users.
Thanks to these updates and its work with global regulators, Binance is a much stronger company today than it was in the past. We've learned valuable lessons that apply across the industry to support cryptocurrency users. We recognize that, alongside compliance, transparency is essential to rebuilding industry confidence amid challenging market conditions and poor industry management. Learning from our own past, we are proud to make some of the most significant investments in compliance, security and transparency of any company in our industry.
Change of direction
Effective immediately, Richard Teng, former Global Head of Regional Markets at Binance, succeeds CZ as CEO. Richard is a highly skilled executive and, with over three decades of financial services and regulatory experience, will guide the company through its next period of growth. Prior to joining Binance, Richard served as Managing Director of the Financial Services Regulatory Authority at Abu Dhabi Global Market, Director of Regulation at the Singapore Exchange (SGX) and Director of Corporate Finance at the Monetary Authority of Singapore.
Compliance and security
Binance has systematically worked to restructure its organization and teams, update its systems, and set a new industry standard for compliance. For example, we have updated and expanded our internal anti-money laundering (“AML”) detection and analysis capabilities. Binance's anti-money laundering compliance is now an industry standard, and Binance continues to make improvements to its overall anti-money laundering policies. Binance also plays a leading role in helping law enforcement fight cybercrime, financial crime and terrorism.
Binance was one of the first exchanges outside the United States to require mandatory KYC procedures for all users. Today, potential users (none of whom can be US nationals) must provide a valid ID and present a "selfie" photo, which Binance matches against their ID with the help of reputable providers worldwide. Binance also conducts searches via World-Check to identify, for example, any criminal history, any ties to terrorism, any placement on politically exposed persons (“PEP”) lists and sanctions watch lists. Binance also uses monitoring tools during and after transactions to detect and stop suspicious transactions. In recent years, Binance has invested considerable resources to improve its compliance program. Today, Binance has new leadership with deep compliance experience, overseeing a compliance team of hundreds, including more than 60 people with prior enforcement experience. law or regulatory agencies and more than 200 individuals with professional compliance certifications, including certified anti-money laundering specialists. In addition to the core compliance team, Binance employs hundreds of specialized operations, product, and technology employees who support the development and execution of the company's compliance programs.
Binance takes sanctions compliance seriously and has an autonomous team responsible for ensuring that the organization diligently complies with global sanctions rules. Binance has also dedicated considerable resources and efforts to comply with sanctions. Today, in addition to KYC and IP address blocking, Binance uses advanced third-party tools to voluntarily implement controls and restrictions related to the sanctions laws of countries such as the United States, including surveillance and real-time filtering of onchain sanctions-related transactions.
Law enforcement cooperation
Binance also employs several teams that regularly collaborate with law enforcement agencies and officials, collectively numbering over 70 members. Binance has proactively discovered and assisted law enforcement with national security issues in countries around the world, including the United States. Additionally, from January 1 to November 13, 2023, Binance processed over 52,700 law enforcement requests, serving 12,699 registered law enforcement officers worldwide through its government law enforcement application. This is in addition to the more than 50,000 requests that the Binance team has processed in 2022.
Binance proactively shares knowledge with law enforcement. In 2022, Binance organized and participated in more than 70 law enforcement training workshops on combating cybercrime and financial crime across the world. Building on these efforts, Binance announced in September 2022 the establishment of a global training program to help law enforcement detect and combat financial crimes and cybercrime.
In 2023, our dedicated law enforcement training team, with the support of our investigation team, delivered 120 on-site or online training courses and workshops which consistently received a very positive response from the police. law enforcement community.
Binance is pleased to be one of the most important global law enforcement partners in their fight against illicit financial activities around the world.
Commitment to transparency
Binance carefully protects its customers' assets. Users can withdraw 100% of their assets from the platform at any time. As part of its commitment to transparency, Binance has shared the addresses of its hot and cold wallets, as well as published proof of reserves and proof of collateral for B-Tokens in the Merkle tree.
Binance has also implemented security measures for users, including the Margin Insurance Fund, which protects users from losses when their cross/isolated margin is less than zero or when a user is unable to repay their debts. Binance is one of the first cryptocurrency exchanges to have a secure fund, known as the Secure Asset Fund for Users (“SAFU”), to protect users in extreme cases. Binance has published the wallet addresses intended for this SAFU fund.
Binance combines its security measures with educational initiatives to help users protect themselves and better understand the cryptocurrency ecosystem. As part of its commitment to advancing cryptocurrency education for all, Binance has made more than 430 articles, vocabulary and in-depth cryptocurrency courses available to the public on Binance Academy in 30 languages; it has collaborated with more than 70 universities in 25 countries to provide knowledge on cryptocurrencies and Web3; and it worked with local partners to launch an anti-scam campaign to enable users to identify and avoid scams.
The future of cryptocurrencies
We believe that the cryptocurrency industry and Binance have a bright future.
We have built a community and ecosystem that enables individuals to harness the power of blockchain technology to unlock opportunities for their families, communities, and economies around the world, and we are committed to ensuring that the power transformation of these technologies is experienced by a greater number of people around the world.
*Note: Assets held in Earn accounts are sometimes collateralized by different tokens than those invested, although this should not impact Binance's ability to honor redemptions on a 1:1 ratio.
