Changpeng Zhao, or CZ as the most influential figure in the crypto industry is popularly known, has pleaded guilty to charges of money laundering in the US and will step down as the chief of Binance.
The company reached a $4.3 billion settlement deal with the Justice Department, which resolves a years-long probe into the world’s largest crypto exchange, which included serious allegations of giving access and money transfer facilities to users in US-sanctioned jurisdictions such as Iran, Cuba, Syria, and Russian-occupied regions of Ukraine. The digital assets platform profited from these transactions with significant fees.
As part of the plea agreement, the cryptocurrency exchange has agreed to forfeit $2.51 billion and to pay a criminal fine of $1.8 billion for a total financial penalty of $4.31 billion ($4,316,126,163 exactly). The company will retain an independent compliance monitor for three years and remediate and enhance its anti-money laundering and sanctions compliance programs.
The digital asset platform, separately, also reached agreements with the CFTC, FinCEN, and OFAC, and the Department will credit approximately $1.8 billion toward those resolutions. In a lengthy post on X, the 46-year-old Zhao admitted to making mistakes and said: “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.”
Zhao will personally pay $50 million and has been barred from any future involvement with the company. In addition, the judge set sentencing for February 23 and he faces a possible jail time of up to 18 months.
US Attorney General Merrick Garland, who called the settlement one of the largest corporate penalties in the nation’s history, said: “Using new technology to break the law does not make you a disruptor. It makes you a criminal.
“By failing to comply with US law, Binance made it easy for criminals to move their stolen funds and illicit proceeds on its exchanges. Binance also did more than just fail to comply with federal law. It pretended to comply.”
US Treasury Secretary Janet Yellen said Binance processed transactions by illicit actors, “supporting activities from child sexual abuse, to illegal narcotics, to terrorism, across more than 100,000 transactions.”
It was the second blow against crypto exchanges within a year, following Sam Bankman-Fried and the collapse of FTX, the second-largest crypto exchange in the world. But unlike FTX, Binance wasn’t charged with diverting and misappropriating customer funds.
Customer money safe
In a statement, the cryptocurrency exchange advised customers that their money was safe.
“This announcement allows our company to turn the page on a challenging yet transformative chapter of learning and growth and to begin to share our vision for Binance’s exciting future and the future of the crypto industry,” the statement said.
“The fundamentals of our business remain rock solid. Binance continues to operate the world’s largest cryptocurrency exchange by volume. We take our responsibility as a custodian very seriously and maintain 1:1 backing for every user asset. This means that users can withdraw 100 percent of their assets from the platform at any time. Importantly, we have never faltered in upholding our core values.”
“Our resolutions with the US agencies do not allege or indicate that Binance misappropriated any user funds, and do not allege or indicate that Binance engaged in any market manipulation.”
Former ADGM chief Teng is new CEO
Zhao announced that Richard Teng, a senior Binance executive who joined in 2021 after a stint as the CEO of the Financial Services Regulatory Authority at Abu Dhabi Global Market (ADGM), will be the new CEO of the company.
“Richard is a highly qualified leader and, with over three decades of financial services and regulatory experience, he will navigate the company through its next period of growth. He will ensure Binance delivers on our next phase of security, transparency, compliance, and growth,” said Zhao.
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