Canada’s anti-money laundering agency fined the crypto exchange in May for registration and reporting failures.
Binance, the world’s largest cryptocurrency exchange, is appealing the approximately $6-million fine it received from Canada’s anti-money laundering agency, according to The Canadian Press.
Last month, BetaKit reported the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) found that Binance committed two violations of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. FINTRAC claimed that Binance failed to register as a foreign money services business and to report large virtual currency transactions.
This week, Binance has appealed the fine to a federal court, saying it “does not direct its services at those in Canada and any involvement in the Canadian market is incidental to its global business,” The Canadian Press reported.
RELATED: FINTRAC fines crypto giant Binance $6 million for flouting anti-money laundering laws
Binance was initially established in China by its now-embattled founder and former CEO, Changpeng Zhao, also known as ‘CZ,’ who was raised in Canada and graduated from McGill University.
The Canadian Press further reported that, in its appeal, Binance said it sought to develop Canadian operations that never came to fruition.
In 2021, Binance announced it was pulling out of Ontario as regulators began cracking down on unregulated crypto trading platforms, but continued operating in Canada as it incorporated in Alberta in 2022.
Canadian securities regulators went on to further tighten rules for crypto trading platforms last year, prompting Binance to exit Canada entirely. In FINTRAC’s original claim, the regulator said Binance violated registration requirements up until Sept. 25, 2023, when the exchange ceased all operations in Canada, and had been given several chances to register but missed deadlines.
RELATED: Binance exits Canada as crypto trading platforms feel broader impact of stricter regulations
Businesses like banks, real-estate brokers, casinos, and money services companies are required to report certain transactions to FINTRAC, including suspicious ones and those involving large sums of cash or virtual currency. The regulator said it analyzed the blockchain and found 5,902 transactions valued at the reporting threshold of $10,000 or more that Binance failed to report between June 1, 2021 and July 19, 2023.
The fine and appeal come as Binance has had a tough year of legal issues, including this week’s nearly $3-million CAD (182,820,000 Indian Rupees) fine from the Government of India. The legal filing said the exchange was providing services to Indian clients and holding operations within India without adhering to statutory anti-money laundering obligations.
At the beginning of May, Zhao was sentenced to four months in prison after pleading guilty to breaking the United States’ money laundering laws. Prior to that, a US judge accepted the exchange’s guilty plea and settled on a $4.3 billion USD fine for violating similar laws.
Ontario’s Superior Court of Justice has also certified a class-action lawsuit against Binance, which alleges that the exchange sold crypto derivative products to retail investors without registering with regulators, violating the provincial Securities Act and federal laws.
With files from Josh Scott.
Feature image courtesy Unsplash. Photo by Kanchanara.
