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Binance to Pay $4.3 Billion Penalty in Tether? Exchange Moves $3.9 Billion USDT

Last Updated November 23, 2023 5:19 PM
Teuta Franjkovic
Last Updated November 23, 2023 5:19 PM

Key Takeaways

  • Binance has moved a significant amount of USDT, likely in preparation for its upcoming $4.3 billion fine.
  • Binance’s new CEO has indicated that the exchange is financially sound and capable of paying the fine.
  • The settlement with the DOJ could pave the way for the approval of a regulated Bitcoin ETF.

Binance has recently made a notable financial move that is attracting attention and sparking speculation.

In a substantial transaction , a considerable amount of USDT has been transferred from the “Binance-Cold 2” wallet on the Tron network to the “Binance 3” hot wallet. This colossal transfer stands out as one of the most substantial movements in the cryptocurrency sphere.

Binance Shuffles Billions as DOJ Penalty Looms

In a recent transaction , Binance wallets moved $3.9 billion worth of Tether (USDT), a notable development as the exchange faces a pending $4.3 billion penalty agreed upon with the Department of Justice.

On-chain data reveals  that the bulk of these funds were transferred from one Binance cold wallet, identified as Binance-Cold 2, to another wallet named Binance 3.

The current holdings in the cold wallet stand at $6.6 billion, consisting of $4 billion in USDT and the remaining amount in various stablecoins like Decentralized USD (USDD), USDC, and TrueUSD (TUSD).

The destination wallet now possesses $3.2 billion in assets, primarily composed of Tether’s USDT stablecoin.

Binance has previously asserted that its cold wallets hold the majority of the company’s funds. However, it remains uncertain whether Binance intends to use these funds  to settle the imposed fine by the U.S. government or if there are plans to convert the USDT into U.S. dollars or another fiat currency.

New Binance CEO Faces Task of Paying $4.3 Billion Fine

As per recent reports, Binance’s newly appointed CEO, Richard Teng, has hinted at the exchange’s capability to cover the $4.3 billion fine imposed by the US Justice Department. Teng, who assumed the role on Tuesday, November 21, following Changpeng Zhao’s resignation, conveyed in a post on X  that the exchange is in a sound financial position.

This statement was in response to a comment by Connor Lango , Coinbase’s director of business development, who suggested that Binance is likely able to “pay [the] full $4.3B DoJ fine with 0 crypto asset sales.” Lango, after examining Binance’s crypto holdings through their Proof of Reserves, disclosed  that the exchange still holds a total of $6.35 billion in assets, including $3.19 billion in stablecoins.

On Tuesday, Binance, along with its former CEO Zhao, pleaded guilty to criminal charges related to anti-money laundering and violations of US sanctions. This plea was part of a comprehensive agreement with the US Department of Justice, allowing Binance to continue its operations.

However, as part of the settlement, Zhao will step down as CEO, and Binance will be required to pay a substantial $4.3 billion fine. Additionally, under the terms of the settlement, Zhao will personally pay $200 million in fines.

Binance’s Regulatory Settlement Ushers in New Era for Bitcoin ETFs

A research report  by broker Bernstein suggests that the settlement between Binance and the DOJ could be a significant step toward the approval of a regulated Bitcoin ETF. Markus Thielen, the head of research at Matrixport, a crypto services provider, shares a similar view, stating  that the plea deal is a favorable outcome for both Binance founder Zhao and the company itself.

Thielen expressed confidence that Binance is likely to maintain its position as one of the top three exchanges in the near term. Additionally, he believes that the industry’s commitment to regulatory compliance, evident in the settlement, could enhance the prospects of regulatory approval for a spot Bitcoin ETF.

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