Binance, the world’s largest cryptocurrency exchange, has significantly increased its compliance budget as part of a strategic effort to stay competitive amid mounting regulatory pressure. Speaking at an event in Singapore, Binance CEO Richard Teng revealed that the company spent approximately $213 million on its compliance programs in 2023, marking a 35% increase compared to 2022.
The substantial investment has allowed the exchange to bolster its compliance team and incorporate advanced technologies, including artificial intelligence, to enhance efficiency. Binance plans to hire an additional 170 compliance professionals by the end of the year, Teng said.
“We have the financial ability to invest heavily in compliance programs; not many other people have the ability to do so,” Teng stated during the event, organized by Dow Jones Risk & Compliance.
Turning the Page After Heavy Penalties
This ramp-up in compliance spending comes after a challenging period for Binance. In November 2023, the exchange pleaded guilty to violating U.S. anti-money-laundering laws and sanctions, leading to a record $4.3 billion fine. The exchange’s co-founder and former CEO, Changpeng Zhao, also pleaded guilty and stepped down from his position, with Teng taking the helm in November last year.
Teng, a former Abu Dhabi regulator who joined Binance in 2021, addressed the company’s past mistakes, describing the hefty penalty as part of Binance’s “journey to maturity.”
“Most financial institutions at some point of their life will choose to pay a heavy penalty. But what’s important is to realize the mistakes, make the right investment and move on and become better. That’s what we are doing now,” he said.
Fighting Ongoing Legal Battles
While Binance has made strides in compliance, the exchange remains embroiled in legal challenges. The U.S. Securities and Exchange Commission (SEC) has filed a civil lawsuit against Binance, alleging that it operated as a securities exchange without proper registration. Teng expressed confidence in the company’s legal position, stating that Binance believes it has “a strong case.”
As part of its settlement with U.S. authorities, Binance has agreed to work with two independent corporate compliance monitors. These monitors were appointed by the Department of Justice and the Treasury Department’s Financial Crimes Enforcement Network to oversee the exchange’s adherence to regulatory standards moving forward.
Global Expansion and Regulatory Collaboration
In addition to shoring up its compliance programs, Binance has actively sought regulatory licenses across multiple jurisdictions. Earlier this year, the exchange secured approvals in Indonesia, India, and Thailand, bringing the total number of regulatory licenses it holds to 19. Teng highlighted Binance’s ongoing discussions with law enforcement and policymakers worldwide, noting the stark differences in cryptocurrency regulations across regions.
“Crypto regulations vary drastically,” Teng said. “We’ve received more than 60,000 law enforcement requests for investigations and seizures every year.”
This collaborative approach with global regulators is part of Binance’s broader strategy to regain trust and legitimacy in the cryptocurrency industry, especially as it faces increasing scrutiny from regulators across the world.
As Binance continues to invest heavily in compliance and regulatory partnerships, the exchange aims to demonstrate that it is committed to following the rules while also maintaining its position as a dominant player in the evolving world of digital assets.