Recent events surrounding crypto exchange Binance have sparked significant debate over the United States’ crackdown on crypto companies. According to Omid Malekan, an assistant professor at Columbia Business School and author, the Justice Department’s approach to this case is very different from that taken in traditional finance.
“People who sincerely believe that crypto is a unique way for bad people to do bad things don’t understand how the rest of the financial system actually works,” Malekan wrote on “But it’s all considered OK because someone did the paperwork.”
Malekan also argued that many people on Wall Street would be imprisoned if traditional companies received the same treatment as Binance in similar cases.
“If they had been subject to the Binance standard, there would be hundreds of CEOs in jail and less money for shareholder buyouts (or lobbying). But the bankers were smart enough never to question the game.”
Despite the criticism, Malekan believes the exchange was still “a mistake in lying to its customers and a mistake in not complying.” Binance and its co-founder, Changpeng “CZ” Zhao, recently reached a billionaire settlement with the US government for allegedly allowing individuals engaged in illicit activities to move “stolen funds” through the exchange. CZ resigned as CEO as part of the settlement.
Malekan also praised Binance’s contribution to financial inclusion over the past few years:
“It has done a reasonably decent job integrating tens of millions of poor, brown, and otherwise disadvantaged people into the financial system, something compliant financial companies around the world have chronically failed to do.”
ICIJ Global Money Laundering Survey
Some of the world’s biggest banks allowed criminals to launder billions of dollars, according to leaked documents obtained by the International Consortium of Investigative Journalists (ICIJ).
Investigation, disclosed in September 2020, analyzed more than 2,100 suspicious activity reports (SARs) involving transactions worth more than $2 trillion between 1999 and 2017 that were flagged as potential money laundering or criminal activity by internal compliance managers of financial institutions. The banks facilitating these transactions included major institutions such as Bank of New York Mellon, Deutsche Bank and HSBC.
The ICIJ mobilized more than 400 journalists from 110 news outlets in 88 countries to investigate banks potentially involved in money laundering.
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