Binance allowed a number of flagged accounts to continue transacting on its platform even after entering a landmark settlement with U.S. authorities in 2023, according to findings from a recent investigation.
The review indicates that several accounts previously identified for suspicious activity remained operational after Binance agreed to a multi-billion-dollar plea deal with the U.S. Department of Justice, raising fresh questions over the effectiveness of the exchange’s post-settlement compliance controls.
Under the November 2023 agreement, Binance pleaded guilty to violations related to anti-money-laundering and sanctions compliance failures and committed to strengthening its oversight framework.
The settlement included financial penalties, the appointment of independent monitors, and obligations to tighten transaction surveillance and customer due-diligence processes.
However, the investigation found that a subset of accounts previously flagged for irregular behaviour continued to move funds on the platform after the settlement took effect.
Data reviewed showed transaction activity running into hundreds of millions of dollars during the post-plea period, despite earlier internal or external alerts linked to those accounts.
Compliance experts cited in the report said the continued activity suggests gaps between Binance’s stated compliance commitments and on-the-ground enforcement.
At regulated financial institutions, similar red-flag patterns would typically trigger account restrictions, enhanced monitoring, or outright suspension pending review.
The findings have renewed scrutiny of Binance’s governance and risk controls at a time when global regulators are pressing crypto platforms to meet standards closer to those applied to traditional banks.
Binance’s settlement with U.S. authorities was widely seen as a turning point for the exchange, signalling a shift toward stricter compliance after years of regulatory disputes.
In response to questions raised by the investigation, Binance said it takes compliance seriously and assesses transactions based on the information available at the time.
The company has previously stated that not all flagged accounts are automatically linked to illegal activity and that decisions to restrict or close accounts depend on multiple risk factors.
The issue comes as Binance continues to operate under ongoing oversight tied to the 2023 settlement, with regulators expected to closely monitor its progress in implementing promised reforms.
Any indication that suspicious activity persisted after the plea deal could complicate relations with regulators and heighten the risk of further enforcement actions.
For the broader crypto market, the report underscores the challenges facing large exchanges as they scale compliance systems across millions of users and high transaction volumes.
It also reinforces regulatory concerns that weaknesses in oversight can persist even after major enforcement actions.
Market participants will be watching closely to see whether the investigation prompts additional regulatory responses or accelerates changes to Binance’s compliance framework.
The outcome could have implications not only for Binance but also for how global regulators approach supervision of the wider cryptocurrency industry.