Binance nears deal to escape compliance monitor imposed by DOJ

[WASHINGTON] Binance Holdings, the world’s largest crypto exchange, is moving towards a potential deal with the US Justice Department (DOJ) that would allow it to drop a key oversight requirement in its US$4.3 billion settlement of allegations that it did not do enough to prevent money laundering, according to sources familiar with the matter.

Federal prosecutors are in discussions with Binance over a requirement to maintain an outside compliance monitor, said the sources, who asked not to be identified because the talks are confidential. The shift would mark the latest in a softening approach to the use of independent oversight that has seen the DOJ eliminate several monitors that had been appointed by the Biden administration.

After agreeing to pay one of the biggest corporate fines in US history to resolve its case in 2023, Binance has been working to win over US authorities.

Zhao Changpeng, the company’s billionaire founder who served a four-month sentence as part of the settlement, said on a podcast in May that he was seeking a pardon from Trump. Meanwhile, Binance has played a role in developing the stablecoin issued by World Liberty Financial, one of Trump’s family ventures, Bloomberg has reported.

The Justice Department has not made a final decision on the monitorship, which has a three-year duration. Binance would likely have to adopt enhanced compliance reporting requirements before the DOJ will sign off.

A spokesperson for the DOJ declined to comment. Binance did not respond to requests for comment.

Internal review

The Justice Department has been reviewing whether to release a range of companies from their requirement to maintain outside monitors, a form of oversight that companies have complained about as onerous and expensive.

The DOJ has long used monitors as part of settlements with companies to prevent a repeat of wrongdoing that can range from bribery to money laundering. Matthew Galeotti, the new head of the DOJ’s Criminal division, said in a memo earlier this year that while monitors can be useful in reducing repeat offenders, they “can also impose substantial expense and interfere with lawful business operations.”

The Justice Department has already ended independent oversight for three companies that agreed to take on monitors under pacts with the Biden administration, according to court records. Ahead of the broader review, prosecutors told a court that it would end monitors at two units of Glencore, which had racked up a combined US$142 million in costs in 2023 and 2024, according to the company’s annual reports.

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Two other firms, a unit of UK lender NatWest Group and navy shipbuilder Austal USA, agreed to enhanced compliance reporting requirements as part of the decision to end the monitors, according to court records.

Two monitors

Binance was saddled with two corporate monitors after its DOJ guilty plea and a separate settlement with the Treasury Department’s Financial Crimes Enforcement Network. The monitor working on behalf of FinCEN is still in place.

Binance had previously tried to get Treasury officials to drop the monitor that was required under its settlement, The Wall Street Journal reported in April. A Treasury spokesperson did not provide a comment.

The crypto industry was a big donor to US President Donald Trump during his last election campaign, and also poured millions into electing legislators who favoured fostering access to crypto investments and services. Since taking office, Trump appointed crypto-friendly agency heads and issued executive orders on issues the industry has along lobbied for, such as opening up banking access. Under Trump, the Securities and Exchange Commission dropped or paused many investigations or cases against crypto companies, including Binance.

The US government has not eliminated all monitors, however. It decided to keep a monitor at a US subsidiary of Toronto-Dominion Bank, after it became the first US bank to plead guilty to conspiracy to commit money laundering, Bloomberg Law reported. Balfour Beatty Communities and the government reached an agreement to extend a monitorship set to expire in September until June 2026 to give it more time to test the compliance programme and internal controls after it pleaded guilty in 2021 to defrauding the US military, according to a court filing this month.

Boeing case

Outside monitors became a hot-button issue in the government’s case against Boeing. The Justice Department backtracked on imposing an independent monitor that was originally part of a plea deal last year tied to two deadly 737 Max crashes. A judge in Texas had earlier rejected the deal between Boeing and the Justice Department, citing a provision that required diversity and inclusion criteria to be part of the selection process for the monitor.

In May, the government and Boeing announced they reached a tentative deal that would let the planemaker avoid criminal charges and retain a compliance consultant to work with the company, rather than a monitor who certifies whether the compliance programme satisfies requirements under the agreement. BLOOMBERG