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Why is that one illegal? Didn't Google notify its users if their accounts were under legal review as well?
by bitL 4y ago
Why 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.