Binance processed millions of dollars in transactions linked to sanctioned Russian entities after its historic November 2023 plea deal. A new report from Bloomberg alleges the exchange failed to fully sever ties with blacklisted platforms, including the Russian crypto exchange Garantex.
The continued flows challenge the efficacy of the compliance overhaul promised by CEO Richard Teng. Binance agreed to a $4.3 billion settlement with the U.S. Department of Justice (DOJ) to resolve money laundering violations. That agreement mandated a complete exit from non-compliant jurisdictions and the installation of independent monitors.
The Garantex Connection
Blockchain data cited in the report indicates that Binance facilitated transactions for Garantex and designated Russian banks well into 2024. The U.S. Treasury’s Office of Foreign Assets Control (OFAC) sanctioned Garantex in April 2022 for its role in laundering ransomware proceeds. Interaction with OFAC-designated entities is a direct violation of the compliance standards Binance agreed to enforce.
The DOJ selected Forensic Risk Alliance (FRA) in May to serve as the external monitor for the exchange. These allegations suggest the monitor faces immediate hurdles in verifying the exchange’s separation from illicit financial flows. Under the terms of the plea deal, the DOJ retains the authority to prosecute Binance if it violates the deferred prosecution agreement.
Market Reaction
BNB showed resilience despite the regulatory noise. The token traded flat at $573, maintaining a market capitalization of $84 billion. Traders appear to be pricing in the regulatory friction as a known variable rather than an existential threat, provided the DOJ does not revoke the settlement terms.
Binance has stated it continues to improve its transaction monitoring systems. The exchange faces a three-year monitorship period where it must prove its systems can detect and block sanctioned volume before it occurs.
