Binance’s CEO and founder Changpeng Zhao – known as “CZ” – has stepped down and, in a Seattle courtroom, pleaded guilty to breaking U.S. anti-money laundering laws.
Context: U.S. authorities had been investigating Binance, the world’s largest crypto exchange, for years. The Department of Justice had been investigating since 2018, and the CFTC sued Binance for operating what the regulator said was an “illegal” exchange and a “sham” compliance program back in March.
What are the charges? Binance broke U.S. anti-money laundering and sanctions laws, according to the U.S. authorities.
The company failed to report more than 100,000 suspicious transactions with organisations the U.S. described as terrorist groups, including Hamas, al Qaeda and the Islamic State of Iraq and Syria, the charges said.
It also didn’t report transactions with websites which sold child sexual abuse materials and was one of the largest recipients of ransomware proceeds, according to the charges.
Reuters has a breakdown of the charges here.
As the U.S. attorney general put it: “Binance made it easy for criminals to move their stolen funds and illicit proceeds on its exchanges.”
The settlement: Binance has reached a deal, which includes $4.3 billion worth of fines. It will pay $1.81 billion within 15 months and a further $2.51 billion forfeiture. Zhao himself will personally pay $50 million.
Prosecutors said it was one of the largest corporate penalties in U.S. history. It’s a sign of how the Justice Department, under Democratic leadership, is pushing for charges against law-breaking executives.
Still, Zhao has been allowed to retain his stake in Binance, and his vast wealth is left intact. (He’s worth $10.2 billion, according to Forbes.)
What next? Experts say they reckon Binance can afford the fine. Crypto prices were fairly steady on Wednesday, suggesting the broader market impact was limited, although Binance’s own BNB token did see its biggest drop in more than a year on Tuesday.
As far as crypto investors are concerned, the company has just resolved one of its biggest issues, so they may see Binance as less risky going forward. Earlier on Tuesday, investors were upbeat about it.
The New York Times reported that the Justice Department is seeking an 18-month prison sentence for Zhao, but it’s not clear if that will happen.
Meanwhile, a Binance executive called Richard Teng is taking over as CEO. He joined in 2021.
