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Binance Settlement Agreement Details Revealed, Former SEC Official: Binance Will Face Years of Scrutiny, Collapse Inevitable

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Binance Settlement Agreement Details Revealed, Former SEC Official: Binance Will Face Years of Scrutiny, Collapse Inevitable

Former SEC Internet Enforcement Director John Reed Stark has thoroughly reviewed the settlement agreement between Binance and the U.S. Department of Justice. He believes that multiple regulatory agencies will gradually uncover more evidence of wrongdoing in Binance's years of "guidance supervision," and the collapse of Binance is only a matter of time.

Binance Settlement Details: Comprehensive High-Level Regulation

John Reed Stark referenced legal documents indicating that the conditions imposed on Binance by the U.S. Department of Justice and FinCEN are the highest level of regulatory requirements ever seen, including anti-evasion of sanctions, regular reviews, comprehensive reporting, monitoring, and more.

He expects that for Binance to meet these requirements, it would be impossible without spending tens of millions to hundreds of millions of dollars.

"DOJ" Inspector's Strong Authority

The DOJ inspector will be supervised by various departments within the Department of Justice, including criminal, national security, counterintelligence, export control, etc. Binance must provide the inspector with:

  • Access to all Binance documents, records, facilities as needed.

  • Binance must make best efforts to provide access to former employees, intermediaries, distributors, joint venture partners, and other relevant parties.

  • In certain situations, the inspector must report Binance's misconduct directly to the government without prior notice to Binance of the investigation results.

Factors that may lead the inspector to report directly to the government include:

  1. Obstruction of justice.

  2. Involvement of company executives in illegal activities.

  3. Risk to national security, public safety, environment.

  4. Any other illegal or regulatory violations.

"FinCEN" Also Embeds Inspector

John Reed Stark pointed out that not only the Department of Justice but also the Financial Crimes Enforcement Network (FinCEN) will have a broad regulatory scope in Binance's future oversight.

According to the settlement agreement, Binance is required to appoint a 5-year FinCEN inspector whose responsibilities include:

  1. Evaluating and overseeing Binance's compliance with the settlement agreement to reduce the risk of Binance reoffending.

  2. Evaluating Binance's compliance with non-bank financial institution terms, anti-money laundering laws.

  3. Evaluating sanctions compliance by Binance.

  4. Evaluating Binance's compliance with the Office of Foreign Assets Control (OFAC).

Binance Faces Years of Comprehensive Regulation

John Reed Stark is very pessimistic about Binance's future development, believing that this is almost the beginning of a new round of regulatory scrutiny, where Binance will be required to provide real-time access, audits for several years, and undergo thorough inspections 24/7 for both the company and users.

He stated:

These multiple regulations undoubtedly create extraordinary and unique opportunities for law enforcement agencies and litigation teams to uncover new criminal evidence against Binance. Nothing can stop inspectors from demanding documents, asking key questions, and inspectors may even become witnesses in future litigation cases.

Is Binance's Collapse Just a Matter of Time?

John Reed Stark also mentioned a pessimistic view on Binance and SEC lawsuits, believing that future investigations by inspectors will undoubtedly provide strong support for SEC lawsuits.

Furthermore, the collapse of Binance is only a matter of time:

In my opinion, like drug cartels, financially secretive and opaque companies like Binance cannot suddenly transform into traditional law-abiding, open and transparent institutions. For Binance, passing through SEC investigations is already difficult enough, let alone facing years of comprehensive scrutiny by the DOJ/FinCEN. The collapse of Binance's plea agreement is only a matter of time and will lead to new charges against Binance, CZ, and related partners.