Officials at the U.S. Department of Justice (DOJ) are considering fraud charges against the world’s largest crypto exchange Binance, according to a report published Thursday by New York-based news website Semafor. However, people familiar with the matter said that officials are treading carefully to avoid negatively impacting Binance users and wider market stability.

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Fast facts

  • DOJ officials fear that prosecution of Binance could trigger a bank run — as happened from late 2022 when crypto exchange FTX collapsed. That would cause losses to Binance customers and potentially generate panic in the crypto and wider markets, according to the Semafor report.
  • U.S. prosecutors are considering alternative ways to tackle alleged criminal behavior at Binance. Such measures include fines, as well as deferred or non-prosecution agreements that would see Binance fulfil certain DOJ requirements to avoid indictment.
  • While the Semafor report indicated that the DOJ could pursue fraud charges against Binance, the report did not provide further details. Neither Binance or the DOJ responded to Forkast’s request for comments.
  • The report arrives as Binance faces increasing regulatory challenges worldwide. In the U.S., the crypto exchange is facing charges from the Securities and Exchange Commission and the Commodity Futures Trading Commission for alleged violations of securities and derivatives rules. Binance denies all charges.
  • In Europe, Binance is under anti-money-laundering investigations in France, and left the Netherlands market in June 2023 due to its failure to secure a license from the regulators. The firm also reportedly withdrew a crypto license application in Germany in late July.
  • Elsewhere, Binance reportedly helped its Chinese users bypass the country’s ban on crypto transactions. Chinese users allegedly traded US$90 billion worth of cryptocurrency-related assets in May 2023, making China the largest market for Binance.
  • Binance’s BNB dropped 2.50% in the past 24 hours to US$239.95, according to data from CoinMarketCap. The token slid to a low of US$236.89 on early Thursday morning following the publication of Semafor’s report.

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