Omid Malekan, an author and adjunct professor at Columbia Business School, said in a Nov. 22 social media post on X, formerly Twitter, that the crypto exchange Binance has been punished more severely than traditional financial institutions that have made similar missteps. Malekan said banks that comply with anti-money laundering (AML) rules are still used by criminals for illicit activities.
"People who sincerely believe that crypto is some unique enabler of bad people doing bad things don’t understand how the rest of the financial system actually works. One of the biggest banks in America still operates a division in Russia, and many of the world’s worst tyrants use America as their piggy bank. But that’s all considered OK because somebody did the paperwork. ...Spend five minutes googling ‘banks facilitating money laundering’ and you’ll find that financial firms with household names have been caught doing far worse things involving orders of magnitude more money, yet suffered much milder consequences," said Malekan.
Binance reached a settlement with the U.S. Department of Justice (DOJ) on Nov. 21, agreeing to pay $4.3 billion in penalties to resolve historical compliance issues, according to a DOJ press release. As part of the resolution, the company’s former CEO agreed to step down from his role and pleaded guilty to failing to maintain an effective AML program.
Malekan said on X that unlike banks, brokers, and other non-crypto intermediaries, Binance did not "participate in the pretense of stopping illicit finance" by filing "endless suspicious activity reports" or paying an "annual tithe to the AML-Industrial Complex." He said that those non-crypto intermediaries are used for tax and sanctions evasions "to the tune of over a trillion dollars a year."
A January report from the Cato Institute cites estimates that approximately $8.6 billion was laundered via crypto in 2021, while a total of approximately $2.6 trillion was laundered in 2021.
U.S. authorities have fined multiple major banks for failing to maintain AML protections or enabling sanctions evasions, according to a July report from Enzuzo. In 2019, U.S. and UK authorities fined Standard Chartered Bank $1.1 billion for processing hundreds of millions of dollars worth of transactions for sanctioned countries such as Syria and Iran. In 2012, U.S. officials fined HSBC Holdings $1.9 billion for knowingly facilitating Mexican drug cartels’ laundering of $881 million. In 2020, JP Morgan Chase was fined $920 million after the Commodity Futures Trading Commission (CFTC) said the banking giant had been engaging in market manipulation for eight years.
Malekan is the author of several books, including Re-Architecting Trust: the Curse of History and the Crypto Cure for Money, Markets, and Platforms, according to the Columbia Business School website. He teaches an introductory course to blockchain and cryptocurrency at Columbia, and his writing has been featured in publications including the Wall Street Journal and the Financial Times.