Binance

What the $4.3bn was actually for

In November 2023 Binance admitted wilfully violating the Bank Secrecy Act. FinCEN assessed a $3.4bn civil money penalty — the largest in its own and the Treasury Department’s history — inside a roughly $4.3bn resolution coordinated with the Department of Justice, OFAC and the CFTC 1. Changpeng Zhao pleaded guilty personally and resigned as chief executive.

The findings are specific. The company failed to register with FinCEN as a money services business while telling the world it had left the United States years earlier, kept US users and other significant US ties, and failed to report more than 100,000 suspicious transactions 1. A monitor sits over it for five years, reviewing compliance with the Bank Secrecy Act and US sanctions, and the settlement requires a complete exit from the United States.

Now the part a reader should hold onto. Nothing in that resolution says customer assets were lost, misappropriated or unbacked. It is an anti-money-laundering and sanctions case: about who the exchange allowed to trade and what it did not tell the government. Those are serious in a way that bears on whether this company is well run, and they are not the same risk as an exchange that cannot return deposits. A directory that blurred the two would be as unhelpful as one that mentioned neither.

The 2019 breach, which it covered

The other thing on this record is older and ended better. In May 2019 attackers took about 7,000 BTC — roughly $40m at the time — out of a hot wallet holding around 2% of the exchange’s bitcoin, using a combination of stolen API keys and two-factor codes 2.

Binance covered the whole loss out of its Secure Asset Fund for Users, a reserve it had started the previous year by setting aside a share of trading fees, and no customer lost anything 2. That is why the security component on this page does not read like a warning: a breach absorbed by the company is a different event from a breach passed to the customers, and the model scores the difference rather than the headline.

It is also seven years old now and fades on this site’s schedule. What has not faded is the demonstration that the fund existed and was actually spent, which is worth more than the existence of a fund nobody has seen tested.

And what is still not knowable

Binance publishes a proof of reserves and has no third-party audit on this record, which is the ordinary state of affairs here and the reason the solvency component treats a self-published snapshot as the weakest evidence it accepts. For the largest exchange in the world by volume, that is a notable gap: the company that would be most expensive to be wrong about is one of the ones offering the least verifiable evidence.

It is also not a US-listed company, files no audited accounts anywhere a reader can pull them, and is privately held. The monitorship means somebody credible is looking — but the monitor reports to the Treasury under the terms of the consent order 1, not to you, and its findings are not published.