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Recent reporting from Semafor suggests that the Department of Justice (DoJ) is considering fraud charges against Binance.

This is in addition to the money laundering charges we've been hearing Western Washington has been ready to indict on for months.

Fate of crypto exchange Binance hangs on US money laundering investigation

The reporting also points to concern about the effect an indictment would have on Binance users. It suggests that they're worried an indictment could lead to a run, suggesting they are concerned that Binance is insolvent.

This is an interesting frame because if the exchange is insolvent, I struggle to imagine how allowing it to continue to exist will rectify that state. Maybe the fear is that the indictment would be the motivation for executives to take steps that would result in the exchange going from solvent to insolvent?

In a now-famous book called 'The Chickenshit Club,' Jesse Eisinger discusses the history of how culture changes among prosecutors led to it becoming increasingly unpopular to take cases that might be lost. Binance is an offshore entity with executives in locations from which it's very difficult to extradite. It's not even immediately clear to me that the entities and people in question would be particularly responsive to subpoenas.

These issues haven't stopped the civil regulators, however, as both the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) have chosen to bring suits against Binance.

CFTC lawsuit against Binance claims CZ traded against users

These lawsuits suggest issues with Binance trading against users, wash trading, Binance controlling Binance US accounts, serving US customers, moving money for money launderers, and lots of other potential issues.

These lawsuits also mention conversations obtained from Binance chief Changpeng Zhao's phone, which does at the very least suggest investigators have access to what should be some useful evidence. But will it be enough?

In my very first newsletter, when Elon shut down Revue, I said: "Binance reportedly has a former chief at the Money Laundering and Asset Recovery Section (MLARS) negotiating with the section itself, in order to strike a deal.

"This suggests that, at the very least, charges are on the table. Do I think the US government will take that deal and have a massive press conference bragging about its success? Yes."

In its coverage, Semafor says: "Prosecutors are considering other options, such as fines and deferred or non-prosecution agreements, according to the people. That outcome would be a compromise, holding Binance responsible for alleged criminal behavior while reducing consumer harm."

Which is to say that in a certain sense, it doesn't really matter if Binance committed fraud because, odds are, it won't really be held responsible.