Binance founder and CEO Changpeng Zhao confirmed that his company is planning to expand its staff by between 15-30% in 2023.

Binance Informed VIP Traders of the Deal with the DOJ in September

  • Bloomberg claims Binance informed VIP traders of its settlement with the DOJ months before it went public.
  • The exchange assured traders it could easily afford the $4.3 billion settlement to stay operational. 

A new report from Bloomberg has revealed that Binance informed its VIP traders of its settlement with US regulators months before details of the deal were made public. Binance briefed VIP traders at a private dinner in Singapore in September about a tentative agreement it had with U.S. regulators. Binance allegedly informed the VIP traders that it could easily afford the $4.3 billion fine to continue operating.

Bloomberg claims that former Binance CEO Changpeng “CZ” Zhao was not present at the luxurious private dinner, but Richard Teng, the new CEO, was present at the event, interacting with the attendees.

The US Department of Justice has been keeping a close eye on Binance for over five years. US regulators, including the Department of Treasury and the Commodity Futures Trading Commission (CFTC), accused Binance of violating securities laws and aiding money laundering.

The DOJ struck a $4.3 billion settlement with Binance, which ranks amongst the largest corporate fines in US history. The deal will allow Binance to continue its operations. However, the crypto exchange is required to be accountable to US authorities.

As expected, Binance’s $4.3 billion settlement with the DOJ sparked massive withdrawals from the exchange. Multiple reports claim that users withdrew over $1 billion from the exchange shortly after the settlement was made public.

However, blockchain analytic company Nansen reports that the massive withdrawals have subsided and activities are slowly returning to normal on the exchange. Binance has also begun a pilot program that enables banks to safely store trading collateral from institutional investors outside of the exchange. The program will reportedly help reduce counterparty risk. 

A Binance spokesperson said in a statement:

Counterparty risk has long been a concern for institutional investors across the industry. Our team of crypto natives and traditional finance professionals has been exploring a banking triparty agreement for more than a year to address their concern […] We are in close discussions with an array of banking partners and institutional investors who have also expressed strong interest in participating.

Counterparty risk refers to the possibility that one of the parties to a transaction may fail to fulfill their contractual obligations. Crypto exchanges often require traders to deposit their cryptocurrency or cash on the exchange to trade. However, traders risk losing money if the exchange halts withdrawals or is inactive. Binance seeks to address institutional concerns with the new program.

The program provides traders with the option to store their collateral with a third-party bank rather than on the exchange. The collateral can be Treasury bonds or cash, allowing the traders to earn returns on their trading activities.

Lawrence Woriji Verified

Lawrence has covered some exciting stories in his career as a journalist, he finds blockchain-related stories very intriguing. He believes Web3 will change the world and wants everyone to be a part of it.

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