Changpeng Zhao, the CEO of Binance, has resigned and admitted guilt in violating US anti-money laundering laws as part of a historic $4.3 billion settlement, according to prosecutors on Tuesday. This development stems from a lengthy investigation into Binance, the world’s largest cryptocurrency exchange. In what prosecutors describe as one of the largest corporate penalties in US history, Zhao will personally pay $50 million. The investigation revealed Binance’s breach of US anti-money laundering and sanctions laws, including the failure to report over 100,000 suspicious transactions involving organisations categorised as terrorist groups by the US government.
This settlement deals another blow to the cryptocurrency industry, which has been under increased scrutiny and investigation. The departure of Changpeng Zhao raises questions about the future of Binance, a platform he founded in 2017 and has tightly controlled.
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As part of the settlement, Binance will pay $1.81 billion within 15 months and an additional $2.51 billion in forfeiture. Richard Teng, a longtime Binance executive, is set to take over as the new CEO, according to Zhao’s announcement.
While the Justice Department sought an 18-month prison sentence for Zhao, legal experts noted that the fine, though substantial, appears manageable for Binance. Zhao, with a net worth of $10.2 billion, retains significant wealth and ownership stake in the company despite stepping down as CEO.
US Attorney General Merrick Garland stated, “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.”
The settlement, negotiated with the Commodity Futures Trading Commission (CFTC) and the Treasury Department, underscores Binance’s responsibility for historical criminal compliance violations. In a statement, Binance acknowledged the resolutions and expressed a commitment to turning the page on these compliance issues.
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