Binance Nears Deal to Drop DOJ Monitor from $4.3B Settlement

In 2023, Binance agreed to one of the largest corporate penalties in United States history, paying $4.3 billion to resolve allegations that it failed to prevent money laundering through its platform. As part of the settlement, the Justice Department mandated a three-year external compliance monitorship to ensure the exchange implemented robust anti-money laundering protocols. This oversight mechanism was designed to prevent repeat violations and restore regulatory confidence in the platform’s operations. The settlement also included the imprisonment of Binance founder Changpeng Zhao, who served a four-month sentence and has since sought a presidential pardon from Trump.

The monitorship requirement represented a significant operational and financial burden for Binance. External compliance monitors typically have broad access to company records, systems, and personnel, and their recommendations often require substantial resources to implement. For a global cryptocurrency exchange operating across multiple jurisdictions, this level of oversight could potentially interfere with business operations and innovation while adding millions in compliance costs annually.

The potential removal of Binance’s monitor requirement comes amid a broader policy reassessment at the Justice Department under the Trump administration. Matthew Galeotti, head of the DOJ’s Criminal Division, issued guidance earlier this year questioning the effectiveness of mandatory corporate oversight. The department’s memo acknowledged that while monitors can help prevent repeat violations, they ‘can also impose substantial expense and interfere with lawful business operations.’

This policy shift has already resulted in the termination of independent oversight for three companies that accepted monitors under Biden administration settlements. According to company filings, Glencore Plc units accumulated $142 million in monitoring costs between 2023 and 2024 before prosecutors ended their oversight requirements. Other companies, including NatWest Group Plc and Navy contractor Austal USA, agreed to enhanced compliance reporting as substitutes for ending their monitor requirements, suggesting a pattern that Binance might follow.

The Trump administration’s approach represents a significant departure from previous enforcement strategies, emphasizing reduced regulatory burdens and increased corporate autonomy. This shift aligns with broader administration priorities of deregulation and support for business growth, particularly in emerging sectors like cryptocurrency where the United States seeks to maintain competitive advantage.

Binance’s negotiations with the Justice Department occur against a backdrop of evolving political relationships and regulatory changes. The exchange has established connections to Trump family business ventures, with some reports alleging involvement in the development of World Liberty Financial’s stablecoin USD1, though Binance has denied these allegations. These connections, combined with Changpeng Zhao’s public appeal for a presidential pardon, suggest a complex interplay between business, politics, and regulation.

The regulatory environment for cryptocurrency companies has shifted noticeably under the new administration. The Securities and Exchange Commission has dropped or paused multiple investigations into crypto companies, including Binance, signaling a more accommodating approach to the industry. This changing landscape reflects the administration’s view that excessive regulation stifles innovation and economic growth, particularly in technologically advanced sectors where the United States faces global competition.

If the Justice Department approves the removal of the external monitor, Binance would likely face enhanced compliance reporting obligations as a substitute. This might include more frequent audits, detailed transaction reporting, and increased transparency measures that would still ensure regulatory oversight while reducing the operational burden and cost of a full-time external monitor. The exchange currently maintains two separate monitors from its DOJ settlement and Treasury Department agreement with FinCEN, with the Treasury monitor remaining active regardless of the DOJ decision.

The potential change could have significant implications for Binance’s native token BNB and the broader cryptocurrency market. Reduced regulatory burdens and compliance costs might improve operational efficiency and profitability, potentially positively impacting investor sentiment. However, the exchange must balance any reduced oversight with maintaining robust compliance systems to prevent future violations that could trigger even more severe regulatory responses.

The outcome of these negotiations will set an important precedent for how the United States government approaches corporate oversight in the cryptocurrency sector. A successful removal of the monitor requirement while maintaining effective compliance could demonstrate that alternative oversight mechanisms can be equally effective without imposing excessive burdens on businesses operating in this rapidly evolving industry.