John Reed Stark, a former SEC official, predicts that Binance’s plea deal with the DOJ will collapse due to the unprecedented oversight and compliance requirements imposed by the U.S. authorities.
He shared a compelling perspective on the fate of Binance’s plea deal with the Department of Justice (DOJ), predicting its inevitable collapse.
Stark highlighted the unprecedented oversight and compliance requirements imposed by the U.S. authorities on the world’s largest cryptocurrency exchange and the SEC’s swift incorporation of the facts admitted by Binance in its $4.3 billion settlement.
Binance’s Unprecedented DOJ Monitorship
In a recent post on X, Stark drew attention to three crucial exhibits within the docket that reveal the extent of the DOJ’s involvement in Binance’s operations. These include the “Statement of Facts” admitted by Binance, the “Compliance Commitments,” and the role of the DOJ’s “Compliance Monitorship.”
Stark pointed out that the newly revealed compliance commitments read like a consulting firm’s wish list, estimating the implementation and execution costs to be in the tens or hundreds of millions of dollars.
The compliance commitments cover various areas, such as anti-money laundering, sanctions, customer identification, record-keeping, reporting, and training.
The DOJ Compliance Monitor’s mandate spans various divisions within the DOJ, indicating a comprehensive post-plea engagement that involves the Money Laundering, Asset Recovery, National Security, Counterintelligence, and Export Control Sections.
The monitor will have broad authority to oversee Binance’s compliance with the plea agreement, as well as the applicable laws and regulations.
Another critical element highlighted by the SEC veteran is the level of cooperation required from Binance. The company must grant the monitor access to documents, resources, and personnel and report any potential misconduct promptly.
However, under certain circumstances, the monitor may opt not to inform Binance about its findings, reporting directly to the government instead.
SEC’s Swift Incorporation of Binance’s Admitted Facts
Stark also discussed the SEC’s swift incorporation of the facts admitted by Binance in its $4.3 billion settlement with the DOJ, FinCEN, and the CFTC.
Despite not being part of the plea agreement, the SEC also recently filed a “Notice of Supplemental Authority,” urging the court to consider these new accusatory facts in the ongoing litigation against Binance and Changpeng ‘CZ’ Zhao, former CEO of the firm.
The SEC’s notice cites several facts admitted by Binance that support the SEC’s allegations that Binance and Zhao engaged in fraud, market manipulation, and unregistered securities offerings.
These facts include Binance’s admission that it knowingly allowed U.S. customers to access its platform and trade digital assets that were securities under U.S. law, failed to implement adequate anti-money laundering and sanctions compliance programs, and concealed its true location and ownership from regulators and the public.
Binance’s Impending Plea Deal Collapse
Overall, Stark’s assessment of the impending collapse of the plea deal revolves around the monumental challenges Binance faces with the simultaneous oversight from the DOJ, FinCEN, and the SEC.
He argues that Binance’s plea deal is doomed to fail, as the company will not be able to comply with the stringent and costly requirements imposed by the U.S. authorities and will face further legal action from the SEC.
Stark concludes that Binance’s plea deal is not a victory for the crypto industry but a warning sign of the serious consequences of violating U.S. laws and regulations.
He also cautions investors and customers to be wary of Binance and other crypto platforms that operate outside the legal framework and expose them to significant risks.
