U.S. Justice Department is split over charging Binance as crypto world falters
reuters.com
reuters.com
> [Zhao] instigated a recruitment spree last year that led to the hiring of officials from the Internal Revenue Service's Criminal Investigation division, the U.S. government agency that was investigating Binance
> [...] A recruitment program by Binance among law enforcement officials in the United States, offering salaries that far exceeded what was available at many other finance and crypto firms, according to four people familiar with the outreach
> Binance has hired a former chief of MLARS [Money Laundering and Asset Recovery Section], Kendall Day, a partner at Gibson Dunn, to engage in discussions with the Justice Department.
> [Binance] hired at least five ex-officials from the IRS Criminal Investigation's Cyber Crime Unit, including a new global head of investigations called Tigran Gambaryan
> Faced with the Justice Department investigation, Binance hired an external lawyer from U.S. law firm Paul Weiss, Roberto Gonzalez, who was previously Treasury's deputy general counsel.
You realize this is how the SEC and various regulatory entities end up working? I wouldn't say its shocking. The people are commonly on one side (regulation) or the other (private sector) without any type of "layover" or time out in between.
I think FTX was attempting to hire someone from the CFTC (regulatory body over crypto) as part of their team.
I would love politicians to write up an Anti-Corruption Act with some sensible rules around these types of things to at least put some distance between jobs and counter balances around corruption/collusion. Penalties should be in the range of can't work in that industry anymore to federal prison time. The other idea I'd like to see traction on is implementing term limits in Congress. I don't have a lot of hope that either will happen in my lifetime.
On that note, it will be interesting to see where Fauci goes for "the next stage of his career" at 80.
What appears to be unethical to the public (revolving door) is legally permitted. Basically, it is a collusion between DOJ/SEC/IRS employees, and ex-DOJ/SEC/IRS employees
https://threadreaderapp.com/thread/1600877380683280384.html
This case is going to be even harder because a lot of the evidence and people are not in the United States so everything he describes there is going to be even harder because it will require international law enforcement cooperation — even if China wants to lock down cryptocurrency that doesn't mean they're just doing whatever the U.S. DOJ asks for without careful negotiation — and simple things like language and cultural barriers mean that, for example, they need to find a forensic account who is fluent in the language, terminology, and practices in multiple other countries. It also makes it hard to do the common practice where they catch someone low-level and get them to testify against their boss in exchange for leniency since a lot of those people are not going to be easily accessible to U.S. law enforcement.
> Among Binance's arguments: A criminal prosecution would wreak havoc on a crypto market already in a prolonged downturn.
The famous "Too Big To Jail" argument. Worked for US banks. Even the US General Attorney agreed with this view:
> Attorney General Eric Holder, the top U.S. law-enforcement official, finally admitted this week that bank executives truly are above the law and may commit crimes with virtual impunity.
> Appearing before the Senate Judiciary Committee, Holder acknowledged under questioning by Republican Chuck Grassley of Iowa, the ranking member, that the megabanks are too big to jail. “I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them,”
https://www.marketwatch.com/story/holder-admits-mega-banks-a...
Bank accepts drug money breaking AML and you say it is "victimless crime", but a lot of people are dead because of drug usage or drug wars.
In our case, crypto exchanges not doing AML can facilitate crypto hacking or ransomware.
That’s like saying the copper miners are somehow responsible for war deaths because copper is an essential component of ammunition, and if they just figured that out and didn’t sell or allow their products to be sold to ammunition manufacturers, we’d have world peace.
> if they had to use the traditional banking system there are multiple chokepoints which made it much harder to get and keep significant sums that way
And no one at all would be able to sneak money through banking system if the government just executed anyone using a bank!
No, in the sense that when you are telling people to leave an existing process which has safeguards you are then taking on the responsibility for not causing a regression in the level of protection.
Breathing air isn’t a good comparison because it doesn’t have the primary purpose of evading oversight. More appropriate comparisons do: cash, wire transfers, store credit, etc. all have restrictions to curtail criminal activity because we know that it is otherwise inevitable. Unless you can show that all use of cryptocurrency is benign we have to assume that it will follow every other financial system in human history and be used for a mix of purposes, and thus require the same mitigations.
So prove you're innocent.
Yeah no thanks. I hope crypto finds a way to totally squash warrantless search of your documents (AKA KYC) to engage in finance.
Cryptocurrency does not have those safeguards and is famously popular for all kinds of criminal activities so it’s hard to take seriously the assertion that it’s all victimless and doesn’t need the same countermeasures.
That one can transfer $50k worth of something like XMR, seemingly anonymously, is the entire point. You get your 4th amendment rights back.
If you want to argue that your bank checking ID is an illegal search, feel free to contact your elected representative.
The violation wasn't money laundering the violation was not putting into place state mandated guards to impose AML compliance and the appropriate (arguably unconstitutional) searches.
Is there a presumption of innocence or guilt? Which do you prefer?
It's also important to consider that “innocence or guilt” is not the right framing here because a bank verifying ID is not an accusation of crime but making sure that the information is available should accusations arise.
Was someone making the assertion that money laundering using one medium is (generally) victimless while money laundering using a different medium is not?
Can you explain or clarify for me why you believe that is the argument made? I re-read the thread back to original post and I don't understand why you say so.
> These are generally (although not always) victimless crimes.
That claim seems wildly incompatible with what we have seen with ransomware, the scale of money going to countries like North Korea or Russia, people’s holdings being stolen, etc.
My position is that cryptocurrencies should be held to the same standard as everything else, and found the argument that the improved rigor is unnecessary due to low harm rates unconvincing.
Where I take issue with this is where you call for "the same standard as everything else". The surveillance of cryptocurrency right now is actually very pervasive.
I've seen the theft of millions of dollars in fraudulent wire transfers (I mean 1M+ per incident) in the traditional banking system over and over and over again, no cryptocurrency involved whatsoever. And contrary to what people often say, it's not actually an option for victims to reverse such transactions.
Thus, I personally doubt this surveillance is effective in preventing theft. We are better off spending the resources to harden against these attacks in the first place. I don't think it's worth it overall to engage in the pervasive surveillance of cryptocurrency or traditional bank transactions, unless the goal is something else, such as collecting more taxes or preventing flight of capital, which is what I believe the real fear about cryptocurrency is.
And notwithstanding the above, I have to ask, is it really a good idea to presume guilt and require permission for people to transact with each other in a general sense? And if you do believe this is for the greater good, why not expand the scope of it? Why not put cameras in all of our homes? We have the technology to implement this now, so why not?
Child endangerment, for example. You can be arrested for leaving a pistol in a child's crib, even if they don't shoot anyone with it. Causing the potential danger is the crime.
Banks should have the presumption that collecting KYC information like addresses/names recklessly endangers the children of their clients by exposing their information to officers with guns who are known to harm children when serving warrants.
You cannot charge someone twice with the same crime. If you don’t have strong enough case, DOJ will lose, and that’s done. They cannot bring the case later saying “ok, now we have all the evidence, let’s try again!”.
Of course, this also doesn’t rule out there’s no conspiracy.
> Some of the at least half dozen federal prosecutors involved in the case believe the evidence already gathered justifies moving aggressively against the exchange and filing criminal charges against individual executives including founder Changpeng Zhao, said two of the sources. Others have argued taking time to review more evidence, the sources said.
Other places (California) often base it on when the crime was discovered/known about.
So if someone buried some cash or something, then ignored it, and someone stole it in the meantime, the statute of limitations on prosecuting the theft would be when they went back and discovered it gone, not when it was taken.
I’m sure they are taking it into account.
If the feds are wary of charging anything but a slam-dunk, it's because their career prospects depend on it.
If the investigation is five years old, then this isn't as big of a story as it seems on first glance. Not yet, at least.
"DOJ officials have discussed possible plea deals with Binance's attorneys" is new info, to my knowledge.
[edit] If I were CZ a 5 year long investigation would make me far more worried, not less. The authorities don't investigate nothing for 5 years, after all. If this was a witch hunt it sounds like they found a coven.
Especially with dealing with a bunch of weird international jurisdictions to gather evidence, 5 years is not a long time.
Because it often has to wind it's way through cooperation agreements, other legal systems, etc.
Who is leaking information about a federal criminal investigation, and why?
People pissed at folks they suspect are stalling prosecution, is my guess.
And the US govt is leaking more than a sieve. Remember the ultra top secret CIA black sites? That was leaked.
If you notice, whenever there are crypto crashes, the BTC value after everything stabilizes is usually higher than it was before the mania. I would guess this has to do with BTC being increasingly useful for illegal activities.
Yeah, 'highly useful' enough for the authorities and for everyone to see all the transactions on a public ledger to track down who paid for what and to identify anyone who attempts to convert the BTC to fiat as soon as it hits the exchange.
Totally useful for criminals and hackers. /s Especially when they are getting caught all the time by the authorities when they use Bitcoin.
It has an immutable transaction log showing everything that ever happened. It’s a fundamental part of the currency/protocol.
That means if your wallet gets seized or compromised, someone can see every transaction you ever did, every counterparty, and every transaction each of those counter parties every did.
That’s a big yikes if you’re in a criminal enterprise!
There are ways now to make it less obvious/transparent who is who, but it still exposes a massive treasure trove of info to law enforcement once they start looking, that just doesn’t exist with cash unless someone goes through a ton of effort to create it.
Hell, if I was some 3 letter agency, I’d want as many criminals as possible to use Bitcoin!
The 'for what' part actually isn't that easy, meaning LE at least needs additional data points. And then there is Monero.
OK, but the GP's claim was about Bitcoin, not Monero.
So no. Using exchanges to swap fiat to crypto especially with large amounts of money is not anonymous or easy and it is certainly possible to demix and untumble the transaction trail with tools like Chainalysis.
Mixers and tumblers only makes it harder to trace, but never impossible.
> certainly possible to demix and untumble the transaction trail with tools like Chainalysis.
This is just wrong
Even if that is the case, exchanges will still require your identity for AML regulations if you try to turn the tainted funds into fiat in [0] and [1], especially for large amounts.
Bitcoin is not anonymous and is completely traceable. The same is true for tumblers.
> This is just wrong
Your reply is not a refutation, but a denial without counter evidence.
[0] https://twitter.com/bittlecat/status/1207621591820951552
This per se isn’t a criminal offence. The SEC is still deliberating whether it’s a civil offence.
Don't know about the US but in my country the authorities were very clear that cryptocurrency was for pedos and idiots so let it all burn.
Will be interesting to see what the outcome of all of this will be, if Binance collapses, it'll be the end of Crypto
If Coinbase remains as the sole exchange, then we'll be able to conclude that it is indeed operated by the CIA/FED to promote a digital EURODOLLAR issued by the central bank
It can't be otherwise since China is making moves with its e-YUAN [1,2]
That's the natural outcome of this post-capitalist society in the making, you own nothing, you get your credits that resets every months, no interest rates, no savings
[1] - https://www.chinadaily.com.cn/a/202212/06/WS638e7e0fa31057c4...
[2] - https://www.japantimes.co.jp/opinion/2022/12/12/commentary/w...
What's warranting getting flagged?, care to explain what i'm doing wrong that's against the rules?
Every arguments i provide are always sourced
This is disingenuous framing. Was the run-up to FTX’s dissolution similarly FUD?
Even if it was, not all fear is irrational. Not all caution unwarranted. Trusting a business that refuses to be audited, refuses to disclose its ownership or even where it’s physically or legally based, and has—wherever sunlight shines—been caught breaking the law carries obvious repurcussions.
> the CIA/FED to promote a digital EURODOLLAR issued by the central bank
Wat. Is this the new NAFTA currency conspiracy?
That's not a conspiracy, central banks in both the US / EU are preparing for their digital fiat [1]
It's the FED and CIA's job to prepare the country for the future with research, intelligence and planning, i don't understand why people are afraid to mention them, they did it with SWIFT [2], they did it with Google and the hyper-text [3]
They anticipated and prepared for the digitization of the society and economy ahead of time decades ago already, there is no "conspiracy"
> This is disingenuous framing. Was the run-up to FTX’s dissolution similarly FUD?
I don't think that's disingenuous, when you look at the origins of FTX [4] (ties with US government), how it grew, and how it managed to approach Binance for a possible acquisition + the conjuncture and the climate of the market right before the acquisition are strange, specially after Binance's findings [5]
[1] - https://www.atlanticcouncil.org/cbdctracker/
[2] - https://qz.com/1145669/googles-true-origin-partly-lies-in-ci...
[3] - https://qz.com/1145669/googles-true-origin-partly-lies-in-ci...
[4] - https://twitter.com/mgnr_io/status/1598978315913940994
https://www.coindesk.com/markets/2020/05/08/binance-doesnt-h...
> This seemingly simple question is actually more complex. Until February, Binance was considered to be based in Malta. That changed when the island European nation announced that, no, Binance is not under its jurisdiction. Since then Binance has not said just where, exactly, it is now headquartered.