Changpeng Zhao, the founder of world’s largest cryptocurrency exchange Binance has pleaded guilty to money laundering violations. Zhao, widely known as CZ, will also pay a $50 million fine, will pay a $50 million fine under a deal that requires him to step down as CEO.
In a stunning blow to the global crypto industry, Binance agreed to pay $4.3 billion in fines and restitution as part of the settlements agreement Binance reached with the United States Justice Department, the Treasury Department and the Commodity Futures Trading Commission, which have all been investigating the company for years.
U.S. authorities said that Binance broke U.S. anti-money laundering and sanctions laws and failed to report more than 100,000 suspicious transactions with organizations the U.S. described as terrorist groups including Hamas, Al Qaeda and the Islamic State of Iraq and Syria.
Former Binance CEO CZ confirmed his departure from the chief executive role in a post on X and said Richard Teng, Binance’s head of regional markets, would take over as CEO. Zhao said he would remain a shareholder of the company. He also clarified that there were no allegations related to the misuse of customer funds or market manipulation.
Binance said in a blog post that it takes responsibility for its mistakes and is optimistic about its future. “These resolutions acknowledge our company’s responsibility for historical, criminal compliance violations, and allow our company to turn the page on a challenging yet transformative chapter of learning and growth,” it posted. “With the compliance and governance enhancements enshrined in our commitments, we can begin to share our vision for Binance’s exciting future and the future of the crypto industry. We are confident that Binance will emerge as a stronger company as we lay the foundation for the next 50 years.”
Apart from $50 million fine and stepping down from his role, Zhao also faces up to 18 months in prison under federal sentencing guidelines, but prosecutors are keeping open the possibility of asking for a stiffer penalty, according to officials.
Warning to crypto platforms
U.S. Treasury Secretary Janet Yellen said Binance was guilty of “consistent and egregious violations of U.S. anti-money laundering and sanctions laws.” She said the historic penalties and monitorship would ensure compliance of virtual currency industry with U.S. law and regulations. She warned that “Any institution, wherever located, that wants to reap the benefits of the U.S. financial system must also play by the rules that keep us all safe from terrorists, foreign adversaries, and crime or face the consequences.”
“Binance became the world’s largest cryptocurrency exchange in part because of the crimes it committed – now it is paying one of the largest corporate penalties in U.S. history,” said Attorney General Merrick B. Garland. “In just the past month, the Justice Department has successfully prosecuted the CEOs of two of the world’s largest cryptocurrency exchanges in two separate criminal cases. The message here should be clear: using new technology to break the law does not make you a disruptor, it makes you a criminal.”
U.S. Deputy Attorney General Lisa O. Monaco. “Today’s charges and guilty pleas – combined with a more than $4 billion financial penalty – sends an unmistakable message to crypto and defi companies: if you serve U.S. customers, you must obey U.S. law.”
While the developments mark a big win for the U.S. Justice Department, but it is also a victory for Binance, which will continue to operate unlike FTX and other fallen crypto platforms.
