Internal investigators at Binance, the world’s largest cryptocurrency exchange, discovered in 2023 that over $1.7 billion in cryptocurrency had been routed through the platform to entities in Iran, some with suspected ties to terrorist organizations. The findings, documented in company records reviewed by The New York Times, raise questions about the exchange’s commitment to sanctions compliance despite prior legal settlements.
Unauthorized Access and Transaction Details
More than 1,500 Binance accounts were compromised, with funds originating from just two accounts funneled toward Iranian recipients. Notably, one of these accounts belonged to a verified Binance vendor, suggesting potential internal collusion or a breakdown in vendor vetting processes. The transactions occurred over the course of the previous year, and were flagged by Binance’s own investigative team.
Suppression of Findings and Employee Dismissals
Following the discovery, the investigators reported their findings to senior management. However, within weeks, at least four employees directly involved in the investigation were terminated or suspended, citing vague “violations of company protocol” related to client data handling. This raises concerns about retaliation against whistleblowers or an attempt to downplay the severity of the violations.
Ongoing Compliance Issues Post-Settlement
This incident comes after Binance pleaded guilty in 2023 to anti-money laundering violations and pledged to strengthen compliance measures, including hiring over 60 personnel with law enforcement or regulatory backgrounds. The fact that these transactions were uncovered after the settlement suggests systemic weaknesses persist within the platform’s controls.
Political Connections and Founder’s Pardon
The timing of these events is also notable. The findings surfaced in the months before former President Trump granted a pardon to Binance founder Changpeng Zhao, who had served four months in federal prison for his role in the firm’s prior crimes. Furthermore, the Trump family’s cryptocurrency venture, World Liberty Financial, has reportedly established close ties with Binance, and Zhao was a recent guest at a Trump-hosted conference in Florida.
This case underscores the challenges of regulating crypto exchanges, even after legal penalties. The suppression of internal findings and political connections raise questions about whether Binance’s commitment to compliance is genuine or merely performative. The flow of funds to Iran could have implications for regional security and international sanctions enforcement.
