Why is that one illegal? Didn't Google notify its users if their accounts were under legal review as well?
That’s because of AML laws.
Their account got flagged by OFAC—deservedly or not—and the company is bound from discussing anything about it under any circumstances.
The level it goes to is frankly kind of ridiculous, but that’s the legal regime financial services companies operate under. And that’s not to defend PayPal as a company either. Just that when you see people saying some company is horrible because they close accounts and give no information, it's (not always, but) very frequently one situation that’s entirely out of the company’s hands.
So let's not give these companies too much credit since most of the time they are freezing accounts for much more benign reasons. Like: we didn't do any due diligence on your business beforehand and now a little bit of data indicates you might fall outside of our basic risk bars and we don't want to do any due diligence on you now (so we can save a couple bucks) to confirm whether that is true or not, so we are going to freeze you out and collect interest on your money for the 3-6 month maximum after which you can take your money back and go kick rocks without ever knowing why because we want to limit our legal liability.
> 41. Should an institution tell its customer that it blocked their funds, and, if so, how does the institution explain it to them? > An institution may notify its customer that it has blocked funds in accordance with OFAC's instructions. The customer has the right to apply for the unblocking and release of the funds.
https://home.treasury.gov/policy-issues/financial-sanctions/...
Which is why, to the extent that it it might be legal otherwise, you probably don't want to make written directives documenting your specific knowledge and intent wrt crime.
That’s what you see when you read “do not directly tell the user to run”?
And if that's all they'd done, they might have skated by with just fines. Then they wrote down "do not directly tell the user to run."
How's that different than AML regulations that require banks to "not directly tell" customers they're being investigated?
And this document directly admits that this is an attempt to covertly notify them of something that it is illegal to notify them of. Any shred of plausible deniability that procedure provided them is gone now, because this document is now public.
There's literally nothing in there that says they're breaking gag orders.
From the article:
> The CFTC has alleged that "Binance has taken a calculated, phased approach to increase its United States presence despite publicly stating its purported intent to 'block' or 'restrict' customers located in the United States from accessing its platform... All the while, Binance, Zhao, and Lim, the platform's Chief Compliance Officer ('CCO'), have each known that Binance's solicitation of customers located in the United States subjected Binance to registration and regulatory requirements under U.S. law.
That seems to be what CFC is arguing here.
It's pretty simple.
As they should be. If they aren't laundering money for Russian criminals and designated terrorist organizations.
FinCEN seems to be on top of working to segregate compliant from non-compliant decentralized exchanges, as well as the people using and developing them.
This is basic stuff covered in AML training for any bank intern at a 3rd string bank 20 years ago. Just incredible.
It’s almost as if modern finance is regulated for a reason.
The crypto exchange space. Exchanges are really just unregulated banks in disguise: all the drawbacks and none of the benefits. They're the very same centralized banking intitutions cryptocurrencies were supposed to put an end to.
(Not subject to US regulation, Eurodollar is a thing)
This sentence doesn't make any sense.
No, its an exchange, which among other things handles commodities, hence why the CFTC, not banking regulators, is suing.
Since the launch of its platform in 2017, Binance has taken a calculated, phased approach to increase its United States presence despite publicly stating its purported intent to “block” or “restrict” customers located in the United States from accessing its platform. Binance’s initial phase of strategically targeting the United States focused on soliciting retail customers. In a later phase, Binance increasingly relied on personnel and vendors in the United States and actively cultivated lucrative and commercially important “VIP” customers, including institutional customers, located in the United States. All the while, Binance, Zhao, and Lim, the platform’s former Chief Compliance Officer (“CCO”), have each known that Binance’s solicitation of customers located in the United States subjected Binance to registration and regulatory requirements under U.S. law. But Binance, Zhao, and Lim have all chosen to ignore those requirements and undermined Binance’s ineffective compliance program by taking steps to help customers evade Binance’s access controls.
In the case of anti-money laundering laws, my belief[0] is that it is very illegal to tell a customer they are being flagged.
On the other hand, if it's a copyright thing, or some kind of contract dispute? You're normally totally free to tell the customer.
[0] No professional experience involved, just a lot of reading patio11/Matt Levine.