WASHINGTON—The Department of Justice is reportedly considering filing fraud charges against Binance, the largest cryptocurrency exchange in the world, but has concerns about the effect the move would have on customers.
The DOJ wants to indict Binance for fraud, but prosecutors are worried that doing so could cause a run on the exchange similar to what happened with FTX when it ran into financial difficulties that ultimately resulted in filing for bankruptcy, according to Semafor.
“A run on Binance could cause regular investors to lose their money and potentially spur a panic in the crypto markets,” the report stated.
In lieu of fraud charges, prosecutors are also considering other options, such as fines and deferred or non-prosecution agreements, Kito News said.
“This would be a compromise that holds Binance responsible for their alleged criminal behavior while also mitigating any potential harm to consumers,” Semafor noted.
Additional Legal Challenges
Binance is already facing legal challenges on multiple fronts, including a lawsuit filed by the Securities and Exchange Commission on June 5 that leveled 13 charges against the exchange and its CEO Changpeng Zhao (CZ). The regulator charged Binance and its CEO with operating an illegal platform in the U.S. and for the misuse of customer funds.