The Dutch Central Bank fines Binance €3.3 million for illegal operations

According to reports, Binance has been fined 3.3 million euros for trading in the Netherlands without having the required regulatory permission.

The fine, which was handed down by the Dutch Central Bank (DNB), is one of the largest ever imposed on a crypto company. It follows an investigation that began in early 2019.

At the time, Binance was not registered with the DNB and did not have a license to operate in the Netherlands. However, the exchange was still allowing Dutch users to trade cryptocurrencies on its platform.

The Dutch Central Bank fined the major cryptocurrency exchange Binance in April, according to a news release issued on Monday. The case has now been appealed by Binance.

The DNB said that Binance had breached several provisions of the Dutch Wft, including those relating to anti-money laundering and Know Your Customer (KYC) requirements.

In its press release, the Dutch regulator also warned cryptocurrency companies that they need to obtain the necessary licenses before operating in the country.

“The DNB will continue to take action against providers of crypto services who do not obtain a license,” it says.

Binance ‘cautioned’ in 2021

The Netherlands introduced new regulations for crypto asset providers in May 2020. These regulations require compliance with anti-money laundering and terrorist financing prevention measures. This is intended to help protect against the misuse of virtual assets in illegal activities.

Under the new rules, Binance would have been required to register with the DNB on or before October 1, 2020. However, it failed to do so, prompting the regulator to take action. Binance is now one of several crypto companies to be ‘cautioned’ by the DNB for violating registration requirements.

The Dutch Central Bank announced that Binance had not met these standards, and it continued to provide its services – until at least December 2021.

It’s not the first time Binance has been ‘cautioned’ by regulators. In 2019, the Malta Financial Services Authority (MFSA) issued a warning to the public about the company’s operations in the country. Binance was also told to leave Japan in 2018 after failing to register with local financial authorities.

The Dutch Central Bank’s fine is the latest in a string of regulatory actions against Binance and other cryptocurrency companies. Last month, Binance was fined $400,000 by the US Commodity Futures Trading Commission (CFTC) for offering illegal futures contracts.

The CFTC also ordered Binance to stop trading the contracts and to give back all proceeds from the trades.

The DNB states that the penalty was set at the highest possible level due to Binance’s “extensive” breaches.

The exchange had also done business without any charges for the duration of the inquiry, with the Netherlands having a significant number of Binance users as previously determined.

Nonetheless, due to the crypto firm’s registration application, the regulator reduced the penalty by 5%. The bank also stated that during the procedure, the exchange had been “quite transparent about its business operations.”

Binance reportedly objected to the said fine on 2 June 2022. The crypto exchange’s lawyers reportedly argued that Binance is not a Dutch company and should therefore not be subject to the DNB’s authority.

Binance had also claimed that it did not trade securities. And was therefore not required to comply with the rules set out by the Dutch watchdog.

Nonetheless, according to its co-founder and CEO, Changpeng Zhao, the firm is committed to following regulatory standards in all jurisdictions and locations where it provides services. Binance is currently the world’s largest cryptocurrency exchange by trading volume.

It will be interesting to see how all of these will play out in the end. Meanwhile, what are your thoughts on this latest development? Let us know in the comments below!