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Binance crime monitoring staff exit as CCO reviews role

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Brian Armstrong's Bold Prediction: AI Agents Will Soon Dominate Global Financial

TLDR

  • Several staff members overseeing financial crime monitoring and sanctions checks have left Binance, according to Bloomberg.
  • Chief Compliance Officer Noah Perlman is discussing a possible departure and may leave this year or next.
  • Binance said it has no set timeline for Perlman’s exit and has not selected a successor.
  • The company agreed to a $4.3 billion US settlement over Bank Secrecy Act and sanctions violations.
  • Binance reported a 96% reduction in illicit exposure between January 2023 and June 2025.

Binance faces renewed compliance questions as senior staff leave key monitoring teams. Chief Compliance Officer Noah Perlman is discussing a possible departure. The developments follow the company’s $4.3 billion US guilty plea.

Bloomberg reported that several employees overseeing financial crime surveillance and sanctions checks have exited Binance. The report said Perlman is weighing his own departure and may leave this year or next. Binance said it has no set timeline and has not chosen a successor.

Binance Compliance Team Changes Draw Scrutiny

Perlman joined Binance in January 2023 to lead a global compliance overhaul. He took the role after Binance admitted US law violations. The company agreed to pay $4.3 billion to resolve charges.

US authorities said Binance breached the Bank Secrecy Act and sanctions rules. The settlement included $2.5 billion in forfeiture and a $1.8 billion criminal fine. Then Attorney General Merrick Garland said the penalty “sends an unmistakable message” to the crypto industry.

Bloomberg reported that staff turnover has affected financial crime monitoring and sanctions compliance units. The report said Perlman is discussing “future departure matters” with management. It added that he may leave as soon as this year or next.

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Binance responded that Perlman “remains focused on his current work” overseeing compliance. The company said it “currently has no departure timeline and has not determined a successor.” However, the report has intensified attention on its compliance framework.

Post-plea Oversight and Internal Metrics Under Focus

Binance has sought to ease US oversight tied to its plea agreement. The Wall Street Journal reported that executives have lobbied to remove an independent US monitor. Authorities installed that monitor to supervise anti-money-laundering controls.

The company has highlighted increased compliance investment since 2023. Binance said it expanded compliance staff by more than 30%. It also said it reduced direct exposure to illicit activity by 96% between January 2023 and June 2025.

In March, Perlman said a 96% reduction shows progress. He stated that “a 96% reduction in illicit exposure is a testament” to compliance systems. He added that the system “doesn’t just react to threats, it anticipates them.”

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Binance reported that sanctions-related exposure fell from 0.284% in January 2024 to 0.009% in July 2025. The company described this as a 96.8% decline. It also said it processed over 71,000 law enforcement requests.

The company said it helped facilitate about $131 million in confiscations linked to illicit activity. However, a Financial Times investigation challenged these claims. The FT reported that suspicious accounts tied to terror financing remained active after the plea.

The investigation said hundreds of millions of dollars in suspect flows moved through the platform. It stated that those flows occurred despite promised monitoring upgrades. Binance has not publicly detailed specific responses to the FT findings.

US regulators have collected over $32 billion from crypto firms in recent years. Binance’s $4.3 billion settlement represents one of the largest single components. Treasury Secretary Janet Yellen previously accused the exchange of allowing funds to reach terrorists and cybercriminals while it “turned a blind eye” to basic AML duties.

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Every 5 Minutes: Korea’s New Rule for Crypto Exchanges

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South Korea’s financial regulator has ordered all crypto exchanges to verify user asset balances every five minutes, following a massive overpayment incident that shook market confidence earlier this year.

One botched reward payout exposed systemic cracks across the entire industry.

What Triggered the Rules

In February, Bithumb accidentally sent 2,000 BTC per person instead of 2,000 Korean won ($1.40) during a promotional event. The error amounted to roughly $42 billion in misallocated crypto. The Financial Services Commission (FSC) launched emergency inspections across all five major Korean exchanges immediately after. What they found went far beyond a single human mistake.

Most exchanges were only reconciling their books once every 24 hours. Three had no automatic kill switch to halt trading when discrepancies appeared. Four lacked multi-step approval systems for high-risk manual transactions. Two exchanges hadn’t even separated their general accounts from high-risk transaction accounts — a basic safeguard.

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What Exchanges Must Now Do

The FSC announced a three-pillar reform package on April 6. Exchanges must run automated balance checks every five minutes, with alerts and automatic trading halts triggered by major mismatches. Monthly external audits replace the previous quarterly schedule, and public disclosures must now include asset-by-asset blockchain holdings rather than a simple coverage ratio.

For manual, high-risk transactions such as event payouts, exchanges must use separate accounts, deploy validity-check systems that automatically reject mismatched inputs, and require cross-verification by a third party before execution.

The FSC will also require exchanges to appoint dedicated risk management officers and establish risk management committees — standards already expected of traditional financial firms. Compliance checks move from annual to twice-yearly, with results reported to regulators.

DAXA, the industry body, will complete self-regulatory amendments this month, with systems built out by May. Key provisions will feed into Korea’s forthcoming second-phase Digital Asset Act.

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The post Every 5 Minutes: Korea’s New Rule for Crypto Exchanges appeared first on BeInCrypto.

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Chaos Labs Leaves Aave Due to Budget, Risk Disagreements

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Chaos Labs Leaves Aave Due to Budget, Risk Disagreements

Chaos Labs has parted ways with the Aave ecosystem after serving as the crypto lending protocol’s main risk service provider for three years, citing a budget dispute and disagreements over how Aave should manage risk.

“This decision was not made in haste,” Chaos Labs founder Omer Goldberg said in a post to X on Monday. “We worked in good faith with DAO contributors. Aave Labs was professional and supported increasing our budget to $5m to retain us. However, we are leaving because the engagement no longer reflects how we believe risk should be managed.”

Source: Omer Goldberg

Aave Labs CEO Stani Kulechov said that Chaos didn’t depart on bad terms, but claimed that Chaos pitched a proposal seeking to become the sole risk provider and thus force out other partners — a compromise Aave wasn’t willing to accept.

Chaos played a key role in Aave’s back-end infrastructure, from pricing loans and managing risk in the Aave V2 and V3 markets since November 2022, during which Aave’s total value locked rose fivefold to $26 billion.

Risk has been a major talking point in the Aave community after a user lost $50 million in a trade while interacting with Aave’s interface on March 12. The following week, Aave said it would introduce an “Aave Shield” protection feature to deter users from high-risk trades.

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As for Chaos’ departure, Goldberg said there became an increasing misalignment over how the parties thought risk should be managed. He noted that some Aave contributors had left, raising its workload, while also arguing that Aave V4’s expanded functionality introduced additional operational and legal risks that fell on Chaos’ shoulders.

“While Aave Labs is optimistic about a swift migration to V4, history suggests these transitions take months and even years,” Goldberg said. “Until V4 fully absorbs V3’s markets and liquidity, both systems need to be operated and managed simultaneously. The workload during the transition doesn’t halve. It doubles.”

Weighing the risk of a protocol failure, Goldberg said, “There is no regulatory framework, no safe harbor, and no settled law that answers the question of what a risk manager or curator owes when a protocol fails. If things work, the work is invisible. If things break, the blame is not.”

As such, “We are walking away from a $5 million engagement,” Goldberg said.

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Chaos wanted Aave to boot LlamaRisk, Chainlink: Kulechov

Aave Labs CEO Stani Kulechov told a slightly different story, stating that Chaos wanted to be the sole risk manager and use its price oracles instead of Chainlink’s.

Following that request would have forced Aave to push out its other risk protocol partner, LlamaRisk, and thus abandon its two-layer economic risk model.

Related: DeFi lender Aave launches on OKX’s Ethereum L2, X Layer

Kulechov added Aave was unwilling to integrate Chaos-built price oracles, citing Aave’s “track record” with Chainlink’s services, which its “users are currently more comfortable with at scale.”

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He also said Chaos was already “exploring winding down its risk consultancy services,” and that Aave had offered to double its payment to $5 million to retain them.

Cointelegraph reached out to Chaos Labs for comment.

Kulechov noted that Chaos’ departure hasn’t disrupted the Aave protocol, its smart contracts, token listings or network integrations.

Moving forward, Aave said it “will work closely with LlamaRisk to ensure a smooth transition” and maintain its two-layer economic risk model. 

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Source: LlamaRisk

Chaos’ departure comes amid a protocol-wide feud over how much funding and revenue control Aave Labs should receive versus Aave’s decentralized autonomous organization.

Despite the internal issues, Aave crossed the $1 trillion mark in cumulative lending volume in late February, marking a first in the DeFi industry.

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