In a groundbreaking development, Changpeng Zhao, the billionaire founder and CEO of Binance, has resigned from his position after entering a guilty plea to federal criminal charges. The charges, related to violations of the Bank Secrecy Act, are part of a historic $4.3 billion settlement with the U.S. Department of Justice, as revealed in court documents.
The plea agreement marks the conclusion of a comprehensive multiyear investigation into Binance, the world’s largest cryptocurrency exchange. Changpeng Zhao appeared in a Seattle courtroom before Judge Brian Tsuchida to officially plead guilty. The charges include the failure to implement an effective anti-money-laundering program and willful violations of U.S. economic sanctions.
In his statement on X (formerly Twitter), Zhao acknowledged his mistakes and the need to take responsibility for them. He announced that Richard Teng, Binance’s former global head of regional markets, would take over as the new CEO.
The collaborative endeavor between the Department of Justice, the Commodity Futures Trading Commission, and the Treasury Department resulted in this remarkable legal pursuit. Notably, the Securities and Exchange Commission was noticeably excluded from this unified initiative.
According to Treasury Secretary Janet Yellen, Binance facilitated illicit activities, allowing over 100,000 transactions supporting terrorism and illegal narcotics. Additionally, more than 1.5 million virtual currency trades violated U.S. sanctions. Yellen emphasized that Binance failed to file a single suspicious activity report.
U.S. Attorney General Merrick Garland, in a press conference, labeled the imposed fine as one of the largest ever obtained, sending a stern message that using technology to break the law constitutes criminal behavior.
Changpeng Zhao’s guilty plea includes charges of violating the Bank Secrecy Act, with the Department of Justice recommending a $50 million fine. Zhao has been released on a $175 million personal recognizance bond, and a sentencing hearing is scheduled for February 23.
Despite these legal challenges, Binance will continue to operate under new regulations. The company is mandated to maintain and enhance its compliance program, aligning with U.S. anti-money laundering standards. An independent compliance monitor is also required to oversee Binance’s adherence to the new rules.
The case against Binance delineated three criminal charges, encompassing the operation of an unlicensed money transmitting business, breaches of the International Emergency Economic Powers Act, and participation in a conspiracy. Under the terms of the settlement, Binance is set to forfeit $2.5 billion and pay a fine amounting to $1.8 billion.
The Justice Department highlighted Binance’s “knowing and willful” actions, causing the supply of services to Iran in violation of U.S. sanctions. The settlement aims to deliver a broader message to the entire virtual currency industry about compliance with the law, according to Yellen.
This landmark settlement follows the recent guilty verdict for FTX founder Sam Bankman-Fried on charges of fraud and conspiracy. Regulatory scrutiny on crypto exchanges is intensifying, with the SEC targeting Binance, Coinbase, and Kraken in separate lawsuits. The implications of these actions extend beyond exchanges to impact various tokens and blockchains, raising questions about their regulatory status.
