According to court documents, Binance CEO Changpeng Zhao entered a guilty plea to criminal charges and resigned as CEO as part of a $4.3 billion settlement with the Department of Justice.
Binance CEO CZ Found Guilty and Steps Down From CEO’s Post
The government’s plea agreement ends a multiyear investigation into the biggest cryptocurrency exchange in the world.
Zhao entered a plea in a Seattle courtroom before Judge Brian Tsuchida.
Zhao and others accused of deliberately breaking US economic sanctions and of breaking the Bank Secrecy Act by neglecting to put in place a strong anti-money laundering program.
“In a deliberate and calculated effort to profit from the U.S. market without implementing controls required by U.S. law,” according to the Justice Department.
However, Zhao stated that he had “made mistakes” and “must take responsibility” in a post on X, the former Twitter.
Furthermore, he announced that Binance’s new CEO is Richard Teng, the former global head of regional markets for the business.
Today, I stepped down as CEO of Binance. Admittedly, it was not easy to let go emotionally. But I know it is the right thing to do. I made mistakes, and I must take responsibility. This is best for our community, for Binance, and for myself.
Binance is no longer a baby. It is…
— CZ ???? BNB (@cz_binance) November 21, 2023
The Department of Justice, the Commodity Futures Trading Commission, and the Treasury Department worked together to pursue legal action against Binance and its founder.
However, notably missing was the Securities and Exchange Commission.
Charges on Crypto Exchange
In a statement, Treasury Secretary Janet Yellen claimed that the exchange permitted over 100,000 transactions by criminal actors that financed illegal activities like drug trafficking and terrorism, as well as over 1.5 million virtual currency trades that were against US sanctions.
Additionally, it permitted transactions linked to terrorist organizations like ISIS, al-Qaida, Palestinian Islamic Jihad, and Hamas’ Al-Qassam Brigades.
Moreover, noting that Binance “never filed a single suspicious activity report,” Yellen stated in the press release.
According to U.S. Attorney General Merrick Garland, the fine is “one of the largest penalties we have ever obtained,” during a press conference.
“Using new technology to break the law does not make you a disruptor. It makes you a criminal,” Garland said.
“Binance prioritized its profits over the safety of the American people,” he said.
Binance and Treasury’s Financial Crimes Enforcement Network, or FinCen, have a 92-page consent order that states that the cryptocurrency exchange “even developed a process to notify VIP users if they became the subject of a law enforcement inquiry.”
Fine on CZ by US Department of Justice
According to the plea agreement, Zhao personally pleaded guilty to breaking the Bank Secrecy Act and causing a financial institution to break the law.
Additionally, the DOJ is recommending that Zhao be fined $50 million by the court.
Moreover, Zhao’s sentencing hearing is set for February 23.
He was freed on a $175 million personal recognizance bond, which was backed by $15 million in cash.
Binance will carry on, albeit with revised guidelines.
New Regulations For The Platform
The organization must uphold and improve its compliance program to guarantee that its operations align with U.S. anti-money-laundering regulations.
However, the business must designate a third-party compliance monitor.
Furthermore, Binance is willing to pay a $1.8 bn fine in addition to forfeiting $2.5 bn to the government.
To read our blog on “Binance Introduces a ‘Crypto Rival’ to Elon Musk’s X App,” click here.