Largest crypto platform compliance costs top $200M

Largest crypto platform compliance costs top $200M
The firm is hiring 1,000 people this year including compliance staff.
AUG 22, 2024
By  Bloomberg

Binance Holdings Ltd. is hiring 1,000 people this year with many earmarked for compliance roles as the crypto exchange’s annual spending to meet regulatory requirements, including US oversight under a plea deal, tops $200 million.

Chief Executive Officer Richard Teng, who is visiting the US to talk to monitors and officials, outlined the employment goals for the world’s largest crypto trading platform in an interview with Bloomberg News in New York on Wednesday.

“I’ve been a regulator all my life,” Teng said. “Government agencies are important.” He declined to say whether he has met with the Securities and Exchange Commission during his trip. The SEC is suing Binance and wasn’t part of the US settlement.

That plea deal with the Justice Department and other US agencies included a $4.3 billion penalty for failures that let criminals and terror groups use the exchange. The firm faces years of compliance monitoring by the DOJ and the US Treasury’s Financial Crimes Enforcement Network.

COMPLIANCE WORKFORCE

Binance plans to have a 700-strong compliance workforce by the end of 2024, up from about 500 currently, said 55-year-old Teng. His career includes stints as a senior regulator at the Monetary Authority of Singapore as well as at the city-state’s SGX stock exchange. He was also chief executive officer of the regulator at Abu Dhabi’s international financial center.

Teng said Binance fields a growing number of requests from law-enforcement agencies worldwide, numbering 63,000 so far this year, up from 58,000 in 2023. 

Spending on compliance has climbed from $158 million two years ago and is set to increase further, he said. The monitors appointed by the US agencies, Forensic Risk Alliance and Sullivan & Cromwell, have already begun work. 

“They’re going to do an assessment,” Teng said. “We’re very early in the journey.” The monitors keep an eye on the company’s financial statements and transaction tracking, he added.

In June, a judge ruled that the bulk of the SEC lawsuit against Binance and its billionaire co-founder Changpeng “CZ” Zhao can proceed. The SEC sued Binance and Zhao in 2023 for mishandling customer funds, misleading investors and regulators, and breaking securities rules. The defendants contested the claims and asked for the case to be dismissed. Teng said Binance will continue to fight the accusations.

Teng took over as Binance’s chief executive after Zhao stepped down as part of the US plea deal. Zhao was subsequently sentenced to a four-month jail term.

TENG'S CHANGES

Under Teng, Binance has adjusted the way it works with prime brokers, tightened requirements for listing new digital tokens and spun off its venture arm. But the company has yet to formally designate a global headquarters or release a fully audited set of accounts. 

Teng said the business continues to be profitable and that Dubai, Abu Dhabi and another city he declined to specify are on a short-list of potential locations for the headquarters. A company spokesperson two months ago said Binance’s headcount was upwards of 5,000 staff.

The planned hiring spree also encompasses customer service roles, according to Teng. The expansion follows a rebound in crypto prices and trading volumes from a bear market in 2022 that led to a spate of job losses across the sector.

Latest News

More Americans are invested in the elections than the stock market
More Americans are invested in the elections than the stock market

A substantial number of people in a new 2,200-person survey believe their wealth, their "wallet power" and their retirement timelines are at stake.

Stocks rally to fresh highs as JPMorgan drives bank gains
Stocks rally to fresh highs as JPMorgan drives bank gains

The S&P 500 headed toward its 45th record in the year helped in part by a surprise interest income gain at the Wall Street giant.

Boosting payouts on cash crimps wealth management at Wells Fargo
Boosting payouts on cash crimps wealth management at Wells Fargo

Meanwhile, Wells Fargo’s WIM group reported close to $2.3 trillion at the end of last month.

Another AI-washing case shows where SEC is headed
Another AI-washing case shows where SEC is headed

The Securities and Exchange Commission has focused on "black-and-white" allegations of AI washing, but that could broaden out to a gray area that may loop in more financial services companies, a lawyer says.

High-net-worth giving splits along generational and gender lines, find BofA survey
High-net-worth giving splits along generational and gender lines, find BofA survey

More than nine in 10 HNWIs prioritize charitable giving, but demographics help shape the whys and the hows.

SPONSORED Destiny Wealth Partners: RIA Team of the Year shares keys to success

Discover the award-winning strategies behind Destiny Wealth Partners' client-centric approach.

SPONSORED Explore four opportunities to elevate advisor-client relationships

Morningstar’s Joe Agostinelli highlights strategies for advisors to deepen client engagement and drive success