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There is more commentary by Molly White on Twitter, quoting various parts of the complaint: https://twitter.com/web3isgreat/status/1640373566322491393 https://
by fabian2k 4y ago
There is more commentary by Molly White on Twitter, quoting various parts of the complaint:
https://twitter.com/web3isgreat/status/1640373566322491393 https://twitter.com/web3isgreat/status/1640373566322491393
My favorite is probably the VIP feature "prompt notification of any law enforcement inquiry concerning their account". And of course there are all the text messages indicating they knew all the things they did were illegal.
- deleted 4y ago[deleted]
- bitL 4y agoWhy is that one illegal? Didn't Google notify its users if their accounts were under legal review as well?
- wmf 4y agoIt depends. Often law enforcement investigations come with gag orders so the service provider cannot tell the customer they are under investigation.
- seydor 4y agoPeople are forgetting that Binance is not a US company nor a bank
- mikeyouse 4y agoContrary to their preferences, when 12% of your trading volume comes from a Chicago-based trader, you are square in the realm of "governed by applicable US laws".
- psychlops 4y agoThat's probably Binance.US.
- KptMarchewa 4y agoCFTC explicitely claims that 1) that's not true, 2) CZ and rest of upper management were aware that their restrictions on US users were just for media.
- bobthepanda 4y agoAlso, even if it were, having a subsidiary does not magically launder things the parent company does.
- charliea0 4y agoI’m pretty curious who their large client in Chicago was. Might be Jump Trading but who knows?
- dgellow 4y agoIf they offer their services in the US, they have to comply with US laws. From the article: > The CFTC has alleged that "Binance has taken a calculated, phased approach to increase its United States presence despite publicly stating its purported intent to 'block' or 'restrict' customers located in the United States from accessing its platform... All the while, Binance, Zhao, and Lim, the platform's Chief Compliance Officer ('CCO'), have each known that Binance's solicitation of customers located in the United States subjected Binance to registration and regulatory requirements under U.S. law. That seems to be what CFC is arguing here.
- owenmarshall 4y agoUS financial enforcement agencies take a very expansive view of their jurisdiction. OFAC has gone after non-US companies at non-US banks for violating sanctions because US dollars were used in the process – that's enough for them to establish a US nexus.
- seydor 4y agoAnd when GDPR does it they pick up the pitchforks
- arcticbull 4y agoAnyone who does business in the EU complies with GDPR.
- JumpCrisscross 4y agoAlso, anyone who complies with any paperwork-heavy law complains about it.
- lmm 4y agoAnyone who does business in the EU makes enough of a performative effort that they can claim to be following industry best practice, and maybe even believe it. Approximately none of them actually comply with the GDPR. (For example anyone using Google Analytics is in breach, and knows it if they're paying attention, but it'll take a few years for that to become legally official enough that they can't pretend to be ignorant)
- josefx 4y agoAs far as I understand US companies literally can't, as US law enforcement does not follow any of the procedures and protections required by the GDPR and can just compel the US companies to provide unchecked, unrestricted and undocumented access to whatever data they want no matter where it is stored.
- dragonwriter 4y ago> People are forgetting that Binance is not a US company nor a bank No, its an exchange, which among other things handles commodities, hence why the CFTC, not banking regulators, is suing.
- HWR_14 4y agowhich among other things handles commodities in the US hence why the CFTC
- dragonwriter 4y agoParagraph 3 (and other parts) of the complaint address the US nexus: Since the launch of its platform in 2017, Binance has taken a calculated, phased approach to increase its United States presence despite publicly stating its purported intent to “block” or “restrict” customers located in the United States from accessing its platform. Binance’s initial phase of strategically targeting the United States focused on soliciting retail customers. In a later phase, Binance increasingly relied on personnel and vendors in the United States and actively cultivated lucrative and commercially important “VIP” customers, including institutional customers, located in the United States. All the while, Binance, Zhao, and Lim, the platform’s former Chief Compliance Officer (“CCO”), have each known that Binance’s solicitation of customers located in the United States subjected Binance to registration and regulatory requirements under U.S. law. But Binance, Zhao, and Lim have all chosen to ignore those requirements and undermined Binance’s ineffective compliance program by taking steps to help customers evade Binance’s access controls.
- steveBK123 4y agoCryptobros are forgetting you can't run an unregistered derivatives exchange domiciled in US, OR taking USD, OR customers in US. It's pretty simple.
- seydor 4y agopretty sure you can take USD, you can have USD bank accounts everywhere (Not subject to US regulation, Eurodollar is a thing)
- steveBK123 4y agoif you transact in dollars, prepare to be subject to the long arm of US securities law
- vkou 4y agoPretty sure any bank that ever wants to receive or send a USD wire transfer from/to any other bank needs to play ball with Uncle Sam.
- selectodude 4y agoDollars held outside the US are absolutely subject to US regulation. The banks themselves are not subject to US banking capital requirements because they have no access to the federal reserve. If you commit a US crime with a dollar held overseas, you still fall under US jurisdiction.
- steveBK123 4y agothe brightest minds of a generation, encoding financial crime in their fintech startups, because they couldn't be bothered to hire a lawyer or read any basic financial history or media in their life
- mrguyorama 4y agoNo, they're doing it because they think they are special and clever and the US can't touch them. They wouldn't be having these discussions if they weren't already aware of what the law asks of them.
- gruez 4y agoRight, but nothing in the quote suggests they're breaching gag orders. If your account is frozen, you're going to find out one way or another, especially if you're an active/VIP trader. The only thing that binance is doing is proactively letting the customer know rather than letting them find out next time they try to trade.
- JumpCrisscross 4y ago> only thing that binance is doing is proactively letting the customer know rather than letting them find out next time they try to trade That’s what you see when you read “do not directly tell the user to run”?
- gruez 4y agoIANAL but telling people to run might run afoul of "interfering with investigation" laws, whereas telling their account was frozen (assuming no gag order) isn't. The difference would be that the former is an opinion/advice whereas the latter is a statement of fact. Like the gp mentioned, services telling customers that they've received law enforcement requests isn't exactly something that only shady companies do.
- JumpCrisscross 4y ago> telling customers that they've received law enforcement requests isn't exactly something that only shady companies do And if that's all they'd done, they might have skated by with just fines. Then they wrote down "do not directly tell the user to run."
- gruez 4y ago>Then they wrote down "do not directly tell the user to run." How's that different than AML regulations that require banks to "not directly tell" customers they're being investigated?
- treis 4y ago
- SpicyLemonZest 4y agoThe complaint doesn't claim it's illegal in and of itself, but it supports the idea that Binance more generally saw US law enforcement efforts as an annoyance to be circumvented. These kind of complaints typically try to tell a good story and not just state the unlawful activity.
- deleted 4y ago[deleted]
- KptMarchewa 4y agoIn AML/CTF context it's very illegal, and much of CFTC claims are related to that.
- dragonwriter 4y agoIt (and pretty much everything) is illegal when you do it knowing that it will, and with the specific intent to, facilitate or conceal crime, especially a specific known crime like money laundering. Which is why, to the extent that it it might be legal otherwise, you probably don't want to make written directives documenting your specific knowledge and intent wrt crime.
- stouset 4y agoYou know how there are always stories where people are complaining that some financial company (often PayPal) shut their account down and won’t say why? That’s because of AML laws. Their account got flagged by OFAC—deservedly or not—and the company is bound from discussing anything about it under any circumstances. The level it goes to is frankly kind of ridiculous, but that’s the legal regime financial services companies operate under. And that’s not to defend PayPal as a company either. Just that when you see people saying some company is horrible because they close accounts and give no information, it's (not always, but) very frequently one situation that’s entirely out of the company’s hands.
- jjeaff 4y agoIt should be noted that an account being flagged by OFAC is one of the many reasons a company might flag an account. And it is probably at the bottom of the list of most common reasons an account gets frozen. So let's not give these companies too much credit since most of the time they are freezing accounts for much more benign reasons. Like: we didn't do any due diligence on your business beforehand and now a little bit of data indicates you might fall outside of our basic risk bars and we don't want to do any due diligence on you now (so we can save a couple bucks) to confirm whether that is true or not, so we are going to freeze you out and collect interest on your money for the 3-6 month maximum after which you can take your money back and go kick rocks without ever knowing why because we want to limit our legal liability.
- nr2x 4y agoThis is why you should just bank with HSBC! ;-)
- miracle2k 4y agoWhere does it say customers are not allowed to be notified? For example: > 41. Should an institution tell its customer that it blocked their funds, and, if so, how does the institution explain it to them? > An institution may notify its customer that it has blocked funds in accordance with OFAC's instructions. The customer has the right to apply for the unblocking and release of the funds. https://home.treasury.gov/policy-issues/financial-sanctions/faqs/topic/1601 https://home.treasury.gov/policy-issues/financial-sanctions/...
- hyperpape 4y agoWhat I don't think it being said very explicitly in other responses is that it depends on the law and the circumstances. In the case of anti-money laundering laws, my belief[0] is that it is very illegal to tell a customer they are being flagged. On the other hand, if it's a copyright thing, or some kind of contract dispute? You're normally totally free to tell the customer. [0] No professional experience involved, just a lot of reading patio11/Matt Levine.
- perihelions 4y ago- "Do not directly tell the user to run, just tell them their account has been unfrozen and it was investigated by XXX. If the user is a big trader, or a smart one, he/she will get the hint." The phrasing! LMFAO They put this in writing!
- glerk 4y agoA company protecting the interest of their customers? Horrible!
- hn_throwaway_99 4y agoYeah, to quote Hindenburg Research's recent post: All these companies are doing a great service aiding the historically "underbanked": criminals.
- glerk 4y ago[flagged]
- jjeaff 4y agoSeems unlikely that the target of any suspicion is directed at unaccredited futures traders since by definition, they will have to be dealing in small amounts. Large amounts would make one an accredited investor by definition since high net worth makes one accredited.
- malermeister 4y ago> For example, in February 2019, after receiving information "regarding HAMAS transactions" on Binance, Lim explained to a colleague that terrorists usually send "small sums" as "large sums constitute money laundering." Lim's colleague replied: "can barely buy an AK47 with 600 bucks." And with regard to certain Binance customers, including customers from Russia, Lim acknowledged in a February 2020 chat: "Like come on. They are here for crime." Binance's MLRO agreed that "we see the bad, but we close 2 eyes."
- helaoban 4y ago"Binance currently offers a "Battle Function" that "allows users to compete with each other and earn points" by trading Binance derivative contracts in a "head to head battle to see who is the most profitable" in "a one-minute battle period"". LOL.
- deleted 4y ago[deleted]
- chrisbolt 4y agohttps://threadreaderapp.com/thread/1640373566322491393.html https://threadreaderapp.com/thread/1640373566322491393.html
- alphanullmeric 4y agoAh, so is that something you’re universally against? Say, should you be arrested for warning a shoplifter that police are coming? Or is this only something you’re against when you want to regulate/acquire other people’s money? I notice that much of the “we need to regulate xyz for violating my privacy” crowd stay awfully silent when it comes to the government violating financial privacy, perhaps because their economic policies depend on such control being in place.
- JumpCrisscross 4y ago> when it comes to the government violating financial privacy Yes, a good way to delineate pragmatic from extreme views on privacy are when they find no exceptions for designated terrorist organizations and Russian criminals.
- logicchains 4y ago>designated terrorist organizations Designated terrorist organisation just means someone America doesn't like. The US murdered in cold blood hundreds of thousands of civilians in Iraq yet nobody's trying to restrict the financial dealing of the US government.
- alphanullmeric 4y agoI would support it if: 1. Law enforcement was only targeting terrorist organizations 2. Accessing the account of someone that turned out to be innocent would guarantee they received compensation But that’s not the case. Namely with (1), US regulators are trying to ban currency mixers, privacy coins, derivatives trading, etc so the “muh terrorism” argument is nil. Most of this has nothing to do with terrorism.
- UtopiaFans 4y ago[dead]
- JumpCrisscross 4y ago> US regulators are trying to ban currency mixers, privacy coins, derivatives trading, etc so the “muh terrorism” argument is nil In general, sure. Here, specifically: actual, literal, documented terrorist financing. I'm not a fan of our AML/ATF complex. But recent enforcement actions in crypto, e.g. the mixer being used by North Korea or Binance executives texting each other about laundering for Hamas, are so far over the line of reasonable law enforcement that it makes for a poor backdrop for discussing reform.
- reisse 4y agoIdk, I really don't understand the surprised tone of all the comments. It seems very much like a cognitive distortion to believe that somewhere in financial industry there are clever and professional people doing things in a very adult and responsible way. Especially not texting about committing million dollar crimes (or just moving millions legally) in the same language as discussing memes in Discord with friends. If you believe people must be responsible and professional just because they handle a lot of money, it's your problem, not theirs.
- cowpig 4y agoThis sounds like you're trying to normalize major financial crimes?
- squeaky-clean 4y agoIt sounds like they're saying it is already normalized, people just don't want to accept it.
- cowpig 4y ago"People don't want to accept it" seems incompatible with "it's already normalized" to me The message isn't directed towards people for whom it's normalized, right? Therefore "it's normalized, get with it" is an act of further normalization.
- _glsb 4y agoBinance is not the financial industry.
- tomcar288 4y agoShould banks and financial platforms decide who is and who isn't doing illegal things? The more we expect financial institutions to take on this task, the more they need to crack down on anyone who even looks like they're doing something criminal. This is how you end up with those situations where random people get their financial accounts frozen with absolutely no recourse. Just imagine, if you accepted an international wire from a family member in another country and next thing you know all your accounts are frozen. Do you really want your financial institution to be the judge, jurry and executioner? There's a time and place to go after criminals but I don't think that financial institutions are the ones who should be making the final decisions on these things - that should be left for law enforcement.
- nr2x 4y agoThere are literally hundreds of laws around the world that require banks to monitor for, and report, money laundering. This has been true for decades.
- dan-robertson 4y agoThis seems quite unrelated to the rule that if you want to run a futures exchange for US customers, you need a license from the CFTC.
- glerk 4y agoNo, they shouldn't. But various entities under the US government are claiming the authority to force private businesses (even businesses operating outside of their jurisdiction) to enforce their rules and bear the compliance overhead. And as you can see in this thread, whenever tyranny is making gains, """hacker""" news is laughing and applauding like a bunch of circus seals.
- nr2x 4y agowow, these people make SBF look good in comparison.
- TheAlchemist 4y agoJust wait for THE real one - Tether !
- lone_haxx0r 4y agoI don't get why that would be wrong. If law enforcement asked Binance about my account, of course I would want to know, and would choose an exchange that does tell me vs. one that doesn't tell me. Maybe it's illegal, but then I prefer that over a legal exchange.