From SBF to CZ, why crypto trading institutions are always accused of money laundering

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BEOSIN
BEOSIN
Apr 05, 2024

 

Currently, both SBF and CZ are involved in criminal cases involving money laundering charges. Although the term "money laundering" may sound familiar, it has a precise legal definition.

 

According to the U.S. Treasury Department’s Financial Crimes Enforcement Network, money laundering is “the process by which criminals attempt to conceal the true origin of their illegally obtained funds or proceeds of crime.”

 

The definition states that the money laundering process typically involves three steps:

 

First, illegal funds are secretly introduced into the legal financial system. The funds are then moved multiple times via wires or transfers from multiple accounts, creating chaos. Finally, these funds are integrated into the financial system by making additional transactions until the "dirty money" becomes "clean."

 

Why are the founders of crypto trading institutions from SBF to CZ always accused of money laundering? How do crypto mixers like Bitcoin Fog to Tornado Cash facilitate money laundering? How can virtual asset service providers avoid suspected money laundering transactions and meet compliance requirements? Today we will explain them to you.

 

From SBF to CZ, why are crypto exchange founders always accused of money laundering?

The U.S. Department of Justice in November 2023 charged Binance with money laundering, operating as an unregistered currency transfer business, and violating sanctions, triggering a massive repercussions across the cryptocurrency space. Binance agreed to pay a $4.3 billion fine, while company CEO Changpeng Zhao (CZ) resigned and pleaded guilty to money laundering to settle the charges.

 

Changpeng Zhao has agreed to plead guilty to money laundering violations and exit the world's largest cryptocurrency exchange as part of a comprehensive settlement with U.S. law enforcement and financial regulators.

 

The announcement from the Justice Department, Treasury Department and Commodity Futures Trading Commission comes less than a month after federal prosecutors convinced a jury to find the FTX founder SBF guilty of seven criminal charges, including fraud and money laundering. The jury deliberated , finding SBF guilty of wire fraud, securities fraud and conspiracy to commit money laundering.