In May, Binance had registered with the FIU as the exchange sought to resume operations, after the watchdog FIU issued show-cause notices to nine offshore exchanges operating in violation of rules.
| Photo Credit: Reuters

Financial Intelligence Unit (FIU) has imposed a fine of ₹18.82 crore ($2.25 million) on the crypto exchange Binance for operating in violation of anti-money laundering regulations. Binance did not immediately respond to an email seeking comment.

Virtual digital asset service providers such as crypto exchanges are required to be registered with the FIU as a reporting entity and comply with its anti-money laundering rules.

In May, Binance had registered with the FIU as the exchange sought to resume operations, after the watchdog FIU issued show-cause notices to nine offshore exchanges operating in violation of rules.

What Binance’s $4 billion fine and CEO resignation mean for crypto | Explainer

The watchdog had also asked the Ministry of Electronics and Information Technology (MeitY) to block online access to the exchanges. Crypto exchange KuCoin had registered with FIU in March but faced a smaller penalty amount of ₹34.5 lakh.

Canada’s anti-money-laundering agency had also imposed a fine of $4.38 million on Binance in May for violation of anti-money laundering rules. Changpeng Zhao, the former chief executive of Binance, was sentenced to four months in prison in May by U.S. District Judge Richard Jones in Seattle after pleading guilty to violating the country’s laws against money laundering.

Washington:

The founder of cryptocurrency firm Binance was sentenced to four months in US prison on Tuesday after pleading guilty to money laundering charges, in the most high-profile crypto case since Sam Bankman-Fried was jailed.

Changpeng Zhao, a Canadian, resigned from his post at the world’s largest cryptocurrency exchange platform late last year as part of a deal with US authorities.

According to investigations by two Treasury agencies, Binance failed to prevent transactions by movements such as the Islamic State group, al-Qaeda or the armed wing of Hamas.

Zhao pleaded guilty to violating US anti-money laundering laws and Binance agreed in February to pay $4.3 billion to settle charges.

Prosecutors had asked the judge to impose three years behind bars for a crime that typically results in probation, according to a court filing.

“He made a business decision that violating US law was the best way to attract users, build his company, and line his pockets,” Justice Department lawyers said of Zhao in a sentencing memorandum.

“The sentence in this case will not just send a message to Zhao but also to the world.”

Attorneys for Zhao countered in a filing that being punished with probation is just, appropriate, and in line with legal precedent.

They cited Zhao’s acceptance of responsibility along with what they called his philanthropic track record.

“I made mistakes, and I must take responsibility,” Zhao, who lives in the United Arab Emirates, said in a post on X, formerly Twitter, in November.

He has been in the United States since that time.

Binance was created in 2017 and cornered much of the crypto-trading market, turning its founder and chief executive Zhao into a billionaire.

While Binance was founded in China, Zhao moved its operations to other locations internationally after a crackdown on the crypto sector by Beijing.

Binance runs crypto exchanges and provides other services around the world, but it took a severe hit when crypto markets collapsed and regulators began probing the legality of its business.

The volatile industry surged in 2021, with a range of complex products and celebrity endorsements propelling it to a valuation in excess of $3 trillion in 2022.

But a series of scandals, including the November 2022 collapse of Binance’s main rival exchange, FTX, and criminal charges for several industry executives, saw public confidence evaporate and investors pull their money out of crypto.

FTX founder Bankman-Fried was given a 25-year jail term in March.

The crypto industry has bounced back in recent months, thanks in large part to US regulators giving the go-ahead for exchange traded funds (ETFs) in bitcoin which allow investors to trade the asset without actually opening a crypto account.

Binance’s new CEO Richard Teng told AFP this month that the company spent hundreds of millions of dollars on compliance and was working very closely with regulators.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)