DOJ Considers Charging Binance With Fraud, But Fears Of Run On Exchange Could Lead To Different Outcome

The U.S. Department of Justice (DOJ) is reportedly contemplating the possibility of bringing fraud charges against the cryptocurrency exchange Binance BNB/USD.

However, officials are expressing concerns about the potential impact on consumers, Semafor reported, quoting sources familiar with the matter.

The DOJ's apprehension stems from the fear that indicting Binance could trigger a run on the exchange, similar to what happened with the now-bankrupt platform FTX FTT/USD.

This could result in consumers losing their money and potentially incite panic in the cryptocurrency markets.

In light of these concerns, prosecutors are exploring alternative options, such as imposing fines or entering into deferred or non-prosecution agreements.

These measures would hold Binance accountable for alleged illegal activities while minimizing harm to consumers.

This internal debate underscores the complexity and rapidly changing landscape of cryptocurrency enforcement and regulation in the U.S.

Cryptocurrency firms often operate in a legal gray area, and consumers lack the protections afforded by the traditional banking system.

The DOJ's deliberations come at a time when the need for effective regulation in the crypto space is becoming increasingly urgent.

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As Senator Elizabeth Warren (D-Mass) and three other senators wrote in a letter to Treasury officials, "Given the chance, tax evaders and the crypto intermediaries willing to aid them will continue to game the system, exploit loopholes, and siphon off billions of dollars a year from the U.S. government. You must not give them that chance."

The DOJ's decision on how to proceed with Binance is eagerly awaited.

However, the process has been slow. More than seven months have passed since the Treasury Department and Internal Revenue Service announced that brokers would not have to report any information until the administration issues final rules addressing questions such as the definition of a broker.

As of now, the Treasury has not taken the first formal step of issuing a proposal, which would initiate a lengthy process before the final rules are established.

Binance has not responded to Benzinga's request for comment at the time of publication.

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