Crypto Companies Fined $5.8 Billion In 2023, TradFi Less Than $900 Million
Crypto companies received more fines for poor money controls than traditional financial firms for the first time ever in 2023, according to data compiled by the Financial Times.
In fact, the penalties were hardly comparable. Whereas crypto companies lost $5.8 billion for inadequate customer checks and anti-money laundering controls, their legacy counterparts paid just $835 million for the same, marking a ten-year low.
Most of the 600% discrepancy is accounted for by Binance’s massive $4.3 billion settlement with the Department of Justice in November. The crypto exchange’s founder and then CEO, Changpeng Zhao (CZ), was forced to step down from his position, pleading guilty to sanctions violations the following week.
“The pervasive fraud and criminality in the high-profile crypto arena forced regulators and prosecutors to divert resources,” explained Dennis Kelleher, chief executive of Washington-based Better Markets, to FT.
Kelleher described the Binance settlement as a warning shot to “stop the egregious conduct” among crypto companies “and try to deter it from getting even worse”.
According to WSJ, Binance co-founder He Yi holds at least 10% of Binance’s shares; in the early settlement agreement, the U.S. DOJ wanted her to leave with CZ, but this was not realized in the end; Yi’s only interest is work, she criticized Ronaldo sponsored event for…
— Wu Blockchain (@WuBlockchain) January 3, 2024
Until 2023, banking was the leading financial sector when it came to incurring fines for money laundering violations. As with crypto companies in 2023, banking’s biggest tallies were in years dominated by single multi-billion dollar settlements.
In 2015, for example, BNP Paribas’s $8.9 billion fine for sanctions violations comprised most
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