Changpeng Zhao, the Binance CEO, has pleaded guilty to criminal charges and resigned from his position as part of a $4.3 billion settlement with the U.S. Department of Justice (DOJ). The settlement resolves a multiyear investigation into Binance, the world’s largest cryptocurrency exchange. Zhao and others were charged with violating the Bank Secrecy Act by failing to implement an effective anti-money-laundering program and willfully violating U.S. economic sanctions.
In his statement on X (formerly Twitter), Zhao admitted to making mistakes and emphasized the need to take responsibility.
As part of the settlement, Richard Teng, Binance’s former global head of regional markets, has been appointed the new CEO. The joint effort by the DOJ, the Commodity Futures Trading Commission (CFTC), and the Treasury Department accused Binance of allowing illicit actors to conduct over 100,000 transactions supporting activities like terrorism and illegal narcotics. The exchange also allegedly permitted more than 1.5 million virtual currency trades that violated U.S. sanctions. The DOJ recommends a $50 million fine on Zhao, who has been released on a $175 million personal recognizance bond.
Binance will continue to operate under new regulations, requiring the maintenance and enhancement of its compliance program to align with U.S. anti-money-laundering standards. An independent compliance monitor will also be appointed. Binance has agreed to forfeit $2.5 billion to the government and pay a $1.8 billion fine. Treasury Secretary Janet Yellen emphasized to the virtual currency industry that using new technology to break the law makes entities criminal, stating that the fine is one of the largest penalties ever obtained.
The settlement follows a broader regulatory crackdown on the cryptocurrency industry. Binance, once a relatively obscure name, grew to become the world’s largest crypto exchange. The charges against the exchange include conducting an unlicensed money-transmitting business, violating the International Emergency Economic Powers Act, and conspiracy. This development underscores the regulatory challenges facing the crypto industry, with authorities scrutinizing the operations of major exchanges and their compliance with financial regulations.
