Recent developments surrounding the cryptocurrency exchange Binance have ignited extensive discussions about the United States’ intensified scrutiny of crypto firms. Omid Malekan, an adjunct professor at Columbia Business School and an author, pointed out the distinctive approach of the Department of Justice (DOJ) in this case compared to traditional financial practices.
Malekan argued on social media platform X (formerly Twitter) that those who view cryptocurrencies as unique facilitators of illicit activities fail to comprehend the workings of the broader financial system. He emphasized that even companies adhering to Anti-Money Laundering (AML) best practices within traditional finance still manage to process substantial amounts of illicit funds, with the only distinction being the completion of paperwork.
The professor further contended that if traditional financial institutions were subjected to the same standards as Binance in similar cases, numerous individuals on Wall Street would likely face legal consequences. He suggested that applying the “Binance Standard” to traditional firms would lead to the imprisonment of many managing directors, highlighting the disparity in treatment.
Despite his critique, Malekan acknowledged that Binance was at fault for deceiving its customers and failing to comply with regulations. Recently, Binance and its co-founder, Changpeng “CZ” Zhao, reached a settlement with the U.S. government, involving a substantial financial penalty. As part of the settlement, CZ stepped down from his role as CEO.
Malekan also commended Binance for its role in promoting financial inclusion, noting the exchange’s success in onboarding millions of underserved individuals into the financial system—an accomplishment that traditional compliant financial institutions have consistently struggled to achieve.
In a broader context, the International Consortium of Investigative Journalists (ICIJ) uncovered damning evidence suggesting that some of the world’s largest banks permitted trillions of dollars to be laundered by criminals. Leaked documents from September 2020 revealed over 2,100 suspicious activity reports (SARs) involving transactions exceeding $2 trillion between 1999 and 2017.
Major financial institutions implicated in facilitating these transactions included the Bank of New York Mellon, Deutsche Bank, and HSBC. The ICIJ orchestrated a global investigation, engaging over 400 journalists from 110 news organizations across 88 countries to scrutinize banks potentially complicit in money laundering activities.