- The Department of Justice is reportedly considering fraud charges against Binance but is concerned about the impact on customers.
- Federal prosecutors are exploring alternatives, such as fines and deferred or non-prosecution agreements, to hold Binance accountable while minimizing harm to consumers.
- Doubts have been raised about the report’s legitimacy as it was revealed that Sam Bankman-Fried, who blames Binance for FTX’s collapse, is an investor in Semafor, the news platform that published the report.
A report from news platform Semafor yesterday claimed that the Department of Justice (DoJ) is working out how to file fraud charges against Binance but is worried about the impact on customers if it does so. Semafor claimed that federal prosecutors are exploring alternative options, such as fines and deferred or non-prosecution agreements, to hold Binance accountable for alleged criminal behavior while minimizing the impact on consumers. However, doubt has been cast on the legitimacy of the claims after it surfaced that Sam Bankman-Fried, who holds Binance partly responsible for the collapse of his platform FTX, is an investor in Semafor.
DoJ Wants to Avoid Run
The report yesterday claimed that DoJ officials are considering fraud charges against crypto exchange Binance, but are concerned about the cost to consumers, citing “people familiar with the matter”. Federal prosecutors worry that if they indict Binance, it could cause a run on the exchange similar to the one that helped collapse FTX, causing consumers to lose their money and potentially spurring a panic in the crypto markets.
According to the insiders, prosecutors are instead considering other options, such as fines and deferred or non-prosecution agreements. That outcome would be a compromise, holding Binance responsible for alleged criminal behavior while reducing consumer harm.
Prosecution of Binance in this manner would not be a surprise to anyone in the crypto space, and, if we are to believe the report, it’s gratifying to know they are looking out for consumers.
Bankman-Fried Involvement Brings Doubt
However, the merits of the story have been thrown into some doubt after it was revealed that Sam Bankman-Fried is one of the early backers of Semafor. Bankman-Fried holds Binance and its CEO Changpeng Zhao partially responsible for the collapse of FTX after Binance pulled out of a deal to buy the exchange, which was its last chance of survival at the time.
Therefore, this story could have been a way for Bankman-Fried to plant a seed of doubt about Binance’s long term operations in the U.S.
