CEO Changpeng Zhao is set to plead guilty to federal money laundering charges and step down from his position at Binance, the cryptocurrency exchange he founded. Zhao and Binance have reached a plea deal with the government following a multi-year investigation into the company, as reported by CNBC. As part of the settlement, Binance will forfeit $2.5 billion and pay a $1.8 billion fine, with Zhao personally paying $50 million.
In addition to stepping down from any involvement with Binance for three years, Zhao will plead guilty later on Tuesday to violating and causing a financial institution to violate the Bank Secrecy Act, according to Reuters. The charges stem from an accusation that Zhao and others at Binance failed to institute an effective anti-money laundering program. The Justice Department claims they willfully violated economic sanctions in an effort to profit from the US market without implementing controls required by US law.
Court documents state that Binance facilitated almost $900 million in financial transactions in violation of sanctions against Iran between 2018 and 2022 due to a lack of anti-money laundering measures.
In a statement, Zhao confirmed he is stepping down as CEO, with the company’s former global head of regional markets Richard Teng taking over the top job. “Today, I stepped down as CEO of Binance,” Zhao wrote on Twitter. “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.”
Following his resignation, Zhao plans to take a break before potentially transitioning into investing, but he expressed that he cannot see himself being the CEO of a startup again.
The settlement resolves criminal charges related to breaching sanctions regulations, conspiracy, and conducting an unlicensed money transmitter business. Former compliance chief Samuel Lim will reportedly face charges as part of the deal.
The settlement marks a significant resolution between Binance and various agencies, including the Commodity Futures Trading Commission (CFTC) and the Treasury Department. The CFTC previously charged Binance, Zhao, and Lim with violating its rules and the Commodity Exchange Act.
Treasury Secretary Janet Yellen stated, “Binance turned a blind eye to its legal obligations in the pursuit of profit. Its willful failures allowed money to flow to terrorists, cybercriminals, and child abusers through its platform.”
Binance will continue operations under stricter rules, including the need to ensure compliance with anti-money laundering regulations and the appointment of an independent compliance monitor.
In addition to these challenges, Binance also faces a lawsuit from the Securities and Exchange Commission (SEC) for allegedly helping US traders bypass restrictions and violating securities laws. The SEC has also accused Binance of commingling billions of dollars of customer money with the company’s own funds. These charges were not resolved in the recent settlement.
