The recent developments surrounding Binance, a major cryptocurrency exchange, have triggered intense discussions about the U.S. government's crackdown on cryptocurrency firms. Omid Malekan, an adjunct professor at Columbia Business School and an author, voiced his opinion on the matter, highlighting the Justice Department's distinct approach to the case compared to traditional finance.
Malekan contended that despite adhering to anti-money laundering (AML) best practices, conventional financial institutions handle substantial amounts of illicit funds, albeit with proper paperwork, which has long been deemed acceptable within the industry. He emphasized that if similar treatment were applied to traditional financial entities, numerous figures from Wall Street would potentially face incarceration.
Criticism aside, Malekan acknowledged Binance's wrongdoing by misleading customers and failing to comply with regulations. Binance and its co-founder Changpeng Zhao recently settled with the U.S. government in a billion-dollar agreement, with CZ stepping down as CEO due to alleged involvement in allowing individuals engaged in illegal activities to transfer "stolen funds" through the exchange.
While pointing out Binance's faults, Malekan also commended the exchange for significantly contributing to financial inclusion in recent years. He noted the platform's role in assisting millions of underprivileged individuals, including those from marginalized communities, to access the financial system, an area where compliant financial companies have often fallen short.
Malekan's commentary brought attention to a broader issue, referencing an investigation disclosed by the International Consortium of Investigative Journalists (ICIJ) in September 2020. The investigation delved into over 2,100 suspicious activity reports (SARs) from 1999 to 2017, revealing potentially fraudulent transactions totaling over $2 trillion flagged by financial institutions' internal compliance officers. The investigation implicated major banks such as Bank of New York Mellon, Deutsche Bank, and HSBC in facilitating transactions linked to money laundering or criminal activities. ICIJ assembled an extensive global team of journalists to scrutinize banks that may have been involved in money laundering, involving more than 400 journalists from 110 news organizations across 88 countries.
