Home / News / Crypto / News / Binance has Become “De-Risked” and Investors Have “Less to Worry About” — Mike Novogratz
3 min read

Binance has Become “De-Risked” and Investors Have “Less to Worry About” — Mike Novogratz

Last Updated November 30, 2023 2:29 PM
James Morales
Last Updated November 30, 2023 2:29 PM

Key Takeaways

  • Mike Novogratz said Binance is in a better position after agreeing to pay $4.3B for anti-money laundering (AML) violations.
  • He said the settlement is good for the wider crypto sector too.
  • In the traditional financial sector, AML fines are rarely considered an existential threat and are often treated as a necessary business cost.

As the crypto sector processes the implications of Binance’s $4.3B anti-money laundering (AML) penalty, the idea that recent events could benefit the crypto exchange in the long run has emerged as a prominent theme.

Echoing the sentiment of many in the space, on Wednesday, November 29, Galaxy Digital CEO Mike Novogratz said that on balance, he thought Binance’s settlement is overall a good thing.

Settlement Is Good For Binance And Industry, Says Galaxy CEO

Discussing what the recent Department of Justice (DoJ) means for Binance in a recent podcast, Novogratz was optimistic about the exchange’s future.

“I think the Binance settlement was great for their company and great for the industry,” he told Bloomberg’s Sonali Basik. “I think they’re derisked in lots of ways,” he added, noting that users now have a “lot less to worry about.”

Observing that prior to the DoJ’s charges, Binance was plagued by fears that it could get shut down by regulators and doubts over the security of assets held on the platform, Novogratz noted that in the end, the settlement didn’t allege any misuse of customer funds.

Are AML Fines Just Another Cost Of Doing Business? 

Although he maintained that Binance was guilty of “pretty serious KYC violations,” the Galaxy founder pointed out that AML compliance failings are rife in the traditional financial (TradFi) sector too, remarking that the number of fines and sanctions handed out to TradFi banks in the last 24 months alone was “shocking.” 

And yet, even the most egregious of banks’ regulatory shortcomings are rarely subject to the same degree of scrutiny as those of crypto firms. On the contrary, AML fines are so common among the world’s largest banks that they are often treated as an unavoidable business cost.

According to a study  by Comply Advantage, in 2021, 35% of all firms surveyed said they choose to incur AML fines “all the time.” In the US, a significant majority of financial institutions admitted to doing so at least “occasionally.”

AML fines
  A survey of compliance professionals reveals banks’ nonchalant attitude toward AML fines.

Considering such a nonchalant attitude toward AML is so widespread among TradFi institutions, BitMEX founder Arthur Hayes recently accused the US justice system of double standards.

According to Hayes, the DoJ’s treatment of Binance and its CEO Changpeng Zhao (CZ) “is absurd and only highlights the arbitrary nature of punishment at the hands of the state.”

Was this Article helpful? Yes No