Binance Urges Prime Brokers to Tighten Client Checks, Reports Bloomberg

Cryptocurrency exchange Binance has requested its prime brokers to enhance compliance checks for American clients to avoid interactions with them, according to Bloomberg, citing its own sources.

In November 2023, the platform settled claims with the U.S. Department of Justice, agreeing to pay $4.3 billion.

According to the publication’s sources, following the settlement, Binance demanded partners like FalconX and Hidden Road to gather significantly more information about clients from the United States. The data included residential and work addresses, as well as third-party verification.

Simultaneously, the exchange tightened requirements for listing new assets.

“Binance is fully committed to compliance and discloses how it assesses end users seeking access to the platform,” the company commented.

According to CCData, the exchange’s share in spot crypto trading plummeted amid legal issues from about 60% to ~30%. By March, the figure recovered to 40%.

This was largely driven by a market rally and the outpacing growth of BNB prices. The exchange’s coin has increased in value by 80% since the beginning of the year, surpassing bitcoin in growth rate.

Justin d’Anethan of Keyrock compared Binance to large international banks that “pay fines for such mistakes, tighten requirements, and move on.”

“It is likely that native crypto investors and even new market participants realize that compliance or KYC violations do not really affect a well-functioning platform, its solvency, and liquidity,” the expert believes.

In December, Binance settled claims with the CFTC with a $2.7 billion payment. A civil lawsuit by the SEC against the exchange continues to be considered.

In April, a court will deliver a verdict on Binance co-founder and former CEO Changpeng Zhao. He faces up to 18 months in prison, although earlier discussions mentioned a 10-year term.

Earlier in 2024, the exchange encountered legal issues in Nigeria, where two of the company’s top managers remain in custody.