For months, former SEC enforcement official John Reed Stark has been outspoken about his speculation that action by the U.S. Department of Justice (DOJ) against Binance is imminent or has already been sealed.While these assertions have yet to materialize, Stark has take Again, “another new reason” was presented to X in support of his claim.
Binance Alleged Links to Sanctioned Banks
This time, Stark cited a recent Wall Street Journal report revealing the exchange’s links to sanctioned banks and its involvement in large-scale ruble-to-cryptocurrency trades. He mentioned, “Wall Street Journal reports that through layers of intermediaries, Binance customers can convert funds from sanctioned banks into Binance balances… Is this what it means to operate an international money laundering service? IMHO ,Yes.”
Russians can exchange rubles for digital currencies, specifically stablecoins pegged to the U.S. dollar, which can then be exchanged for fiat at foreign brokerages or transferred to other crypto wallets as a form of payment, the report said. According to the Wall Street Journal, the U.S. Department of Justice is currently investigating whether Binance may have violated U.S. sanctions against Russia.
Close scrutiny from the broader cryptocurrency and legal community has been tracking fresh allegations against an exchange led by Changpeng Zhao (“CZ”). A sweeping 136-page complaint by the U.S. Securities and Exchange Commission (SEC) states that “Binance had a massive market manipulation scheme.” It alleges that certain entities controlled by Binance and CZ may have mixed billions of dollars in customer funds, exposing investors’ assets to undue risk.
Another 76-page CFTC complaint paints a picture of “Binance’s sprawling criminal enterprise,” highlighting its possible evasion of key anti-money laundering procedures.
Respected XRP community attorney John E Deaton added to the discussion by responding to Stark’s tweet, hinting at his expectations for the DOJ’s delayed action. “I’m curious if you (or Joe) have an opinion or theory as to why the DOJ hasn’t filed yet? Is there a strategic reason to wait?” he asked.
Joe Carlasare, who contributed to the speech, said: “I can’t think of a good reason for the delay, but I still believe it will come.”
Stark echoed the community’s sentiments, admitting: “John and Joe, I’m equally baffled – though glad (and relieved) that my views align with fine gentlemen and legal scholars like you.”
Too big to go to jail?
While Stark’s previous claims have yet to materialize, a recent report from Semafor fuels concerns. It suggests the Justice Department is carefully weighing potential fraud charges against Binance against the impact of legal action on the broader crypto ecosystem. Inside sources cited fears of a “bank run,” similar to what was experienced by the now-defunct FTX platform.
The situation could trigger a flood of withdrawal requests, jeopardizing consumer funds and possibly shaking the entire bitcoin and cryptocurrency market. To avoid this, other legal avenues are said to be being considered, including the imposition of fines or a deferred/non-prosecution agreement.
While there is no formal indictment on the record, growing speculation and escalating allegations highlight the critical crossroads Binance is at. Notably, BNB prices have come under pressure again in recent days. As of press time, the price of BNB is $213, and there is a risk of further decline.
Featured image via CCN, chart via TradingView.com