Binance, the world’s largest cryptocurrency exchange, faced criminal charges for violating sanctions and money-transmitting laws and agreed to pay $4.3 billion to settle the allegations. Founder and CEO Changpeng Zhao (CZ) pleaded guilty in Seattle to charges he personally faced, agreeing to pay a $50 million fine and stepping down from the CEO position. Richard Teng, a former Abu Dhabi regulator and later Binance’s regional markets head, will assume the role of CEO.
Binance faced allegations of neglecting to uphold an effective anti-money laundering program, engaging in an unlicensed money-transmitting enterprise, and breaching sanctions law, as revealed in a court filing unveiled on Tuesday. Binance’s $4.3 billion settlement is one of the largest fines ever obtained from a corporate entity. Treasury Secretary Janet Yellen noted that Binance’s settlement with her department’s money laundering and sanctions watchdogs was the largest in Treasury history.
Binance acknowledged facilitating transactions involving Hamas and other terrorist groups on its platform. The exchange is paying a criminal fine of $1.8 billion and forfeiting $2.5 billion, including $3.4 billion going to the Financial Crimes Enforcement Network (FinCEN) and $968 million to the Office of Foreign Assets Control (OFAC) settlement. As part of the agreement with FinCEN, Binance will fully withdraw from the United States and designate a monitor for the next five years. During this period, the U.S. The Department of Treasury will possess the authority to access the records and systems of Binance.
CZ reportedly submitted his guilty plea in a federal court in Seattle today and has concurred to a $50 million fine as a component of the plea arrangement. This penalty is distinct from Binance’s $4.3 billion resolution in the investigation with the Department of Justice (DOJ). CZ faces a potential sentence of up to 10 years in prison but is anticipated to receive no more than 18 months under the plea agreement, which encompasses a renunciation of his right to appeal. A sentencing hearing has been scheduled for February 23, 2024, at 9 a.m. Pacific Time.
CZ’s bond was set at $175 million, following his legal team’s assertion that he would be prepared to put up that amount to secure his release. Nevertheless, government lawyers, who had asked that Zhao be ordered to stay in the country because the US lacks an extradition treaty with the UAE, said they would appeal the release terms.
The Binance case’s resolution signifies yet another significant victory for the U.S. government over a big player in the cryptocurrency realm, occurring within a few weeks of FTX founder Sam Bankman-Fried being convicted of fraud and conspiracy charges linked to his crypto exchange. The agreement between U.S. authorities and Binance has substantially concluded many investigations, both civil and criminal, into the exchange spanning several months. Nevertheless, the cryptocurrency platform is still facing an ongoing civil case with the U.S. Securities and Exchange Commission, which accused Binance, Binance.US, and CZ of violating securities laws in June.