The US Department of Justice (DOJ) is investigating whether Iran used Binance, the world’s largest cryptocurrency exchange, to circumvent American sanctions, as reported by the Wall Street Journal.
The probe centres on more than $1 billion that allegedly flowed through the platform to a network funding Iran-backed militant groups, including Yemen’s Houthi militants. A Hong Kong-based payments company, Blessed Trust, is allegedly responsible for sending much of that sum. The inquiry returns Binance to legal scrutiny after founder Changpeng Zhao received a presidential pardon in October, having previously pleaded guilty in 2023 to anti-money-laundering violations and paid a $4.3 billion fine. The Treasury-appointed compliance monitor overseeing Binance’s remediation program has also requested information on the transactions.
The Wall Street Journal alleges that the internal investigators who flagged the suspicious activity last November were subsequently suspended. Binance disputes that characterisation, saying the employees left on individual circumstances and that its internal investigation continued. The Treasury-appointed monitor, which Binance has sought to remove and whose earlier requests the company has reportedly blocked, remains in place until 2029.
A Binance spokesman denied direct dealings with sanctioned entities, arguing its own investigation uncovered the illicit network. Senator Richard Blumenthal has separately opened a congressional inquiry, calling Binance’s response to his requests “evasive.” Binance has filed a lawsuit against the Wall Street Journal, challenging its earlier reporting on the matter.
That Binance continues to struggle with such matters despite having not one but two compliance monitors in place is itself instructive. Under the terms of its 2023 settlements, Binance operates under a DOJ-appointed monitor (Forensic Risk Alliance) and a separate Treasury-appointed monitor (Sullivan & Cromwell), both of which are focused on anti-money laundering and sanctions compliance. In addition to having reportedly sought the removal of the Treasury monitor, it was reported late last year that Binance was in discussions with the DOJ regarding ending that monitorship early.
A question worth sitting with: did either monitor engage with the internal investigators who were allegedly suspended for flagging the suspicious activity? If not, that raises serious questions about the monitors’ visibility into the firm’s compliance and whether monitorship as currently structured is capable of detecting the internal dynamics that matter most. And, if so, that raises separate questions regarding what material information those monitors may be positioned to share with the DOJ or Senator Blumenthal.
In a “Weekend Reading” article published in September 2024, Starling Founder & CEO Stephen Scott examined the prevailing reliance on corporate monitorship as a means to assess and resolve repeated allegations of misconduct and other “culture problems.” This approach, he argued, is not fit for purpose and prioritizes performative value over demonstrative progress.
“With all respect for their many diverse skills and legal expertise, there is simply no reason to believe that lawyers can be expected to deliver capabilities that even highly trained behavioral scientists struggle to master,” Scott wrote. “But because there is no available, popular narrative that establishes who we might look to instead when culture questions arise and culture solutions are demanded, we call the lawyers, if only because that is the established narrative.” ▸ Read More
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