Crypto Exchange Binance Fined $3.4 Million by Dutch Central Bank
Key Insights:
DNB claims that Binance offered services to Dutch citizens without the required registration.
A public warning was issued against the company last year.
Binance received a larger penalty due to its trading volume.
In a major blow to Binance, De Nederlandsche Bank (DNB) has slapped the world’s largest cryptocurrency exchange by trading volume with a hefty $3.4 million fine for failing to obtain regulatory approval to operate in the country.
DNB claims that Binance continued to offer services to Dutch citizens without the required registration.
Operating Illegally
According to De Nederlandsche Bank, a penalty was issued in April this year but Binance objected to the fine and indicated that it would appeal. A public warning was also issued against the company in August last year on grounds that it had been violating Dutch money-laundering laws. During this time, DNB had warned that such violations “may increase the risk of customers becoming involved in money laundering or terrorist financing”.
What’s more, the central bank claims that Binance had a competitive advantage against companies possessing a DNB registration during the period it was in non-compliance.
DNB requires virtual asset service providers (VASP) to complete registration under the Money Laundering and Terrorist Financing Prevention Act since May 21, 2020.
The regulator noted that violations committed by Binance are punishable by a third category fine, meaning that the administrative fine has a base amount of €2 million.
Trading Volume
Despite the administrative fine having a base amount of $2.03 million, De Nederlandsche Bank applied a heftier penalty due to the platform’s large trading volume. DNB cited several reasons for such a decision.
According to the regulator, Binance is not only the largest provider of cryptocurrency services worldwide, but it also has a “very large number of customers in the Netherlands” with global daily trading volume amounting to “$13.7 billion”.
The increased penalty was also due to prolonged violations by Binance occurring from May 2020, when DNB introduced the registration obligation, until December 2021.
As it currently stands, Binance has submitted an application for registration, which is being assessed by the central bank. DNB has thus reduced the fine by 5%, in part because Binance has already submitted a registration application and also because the exchange has been “relatively transparent about its operations throughout the process”. The company has since set up a local branch, Binance Nederland BV.
Besides the setbacks, Binance received a certification from the Bank of Spain this month to operate as a virtual asset service provider in the country. In May, both France and Italy also licensed the crypto exchange as an official digital asset provider, while Abu Dhabi granted it provisional approval to operate as a broker-dealer in April.
This article was originally posted on FX Empire
