In a groundbreaking development, Changpeng Zhao, the CEO of Binance, has pleaded guilty to criminal charges and stepped down from his position as part of a monumental $4.3 billion settlement with the U.S. Department of Justice. The plea marks the resolution of a lengthy investigation into Binance, the world’s largest cryptocurrency exchange.
According to court documents, Zhao appeared before Judge Brian Tsuchida in a Seattle courtroom to enter his plea. The charges against him and others include violations of the Bank Secrecy Act for failing to implement an effective anti-money-laundering program and willfully violating U.S. economic sanctions. The Justice Department alleges a deliberate effort to profit from the U.S. market without implementing required controls.
In a statement on X (formerly Twitter), Zhao acknowledged making mistakes and emphasized the need to take responsibility. He announced that Richard Teng, the company’s former global head of regional markets, will succeed him as the new CEO of Binance.
The joint effort by the Department of Justice, the Commodity Futures Trading Commission, and the Treasury Department resulted in a comprehensive settlement. Treasury Secretary Janet Yellen highlighted the gravity of Binance’s actions, stating that the exchange facilitated illicit transactions supporting activities such as terrorism and illegal narcotics. Yellen also emphasized that Binance allowed transactions associated with terrorist groups without filing a single suspicious activity report.
U.S. Attorney General Merrick Garland, in a press conference, stated that the imposed fine is one of the largest penalties ever obtained. Garland warned that using new technology to break the law does not make one a disruptor but a criminal.
As part of the settlement, Binance will forfeit $2.5 billion to the government and pay a fine of $1.8 billion. The company will continue to operate under new ground rules, including maintaining and enhancing its compliance program to align with U.S. anti-money-laundering standards. An independent compliance monitor will also be appointed.
The charges against Binance encompass conducting an unlicensed money-transmitting business, violating the International Emergency Economic Powers Act, and conspiracy. The Justice Department asserted that Binance knowingly and willfully caused the supply of services to Iran, breaching U.S. sanctions.
Changpeng Zhao personally pleaded guilty to violating the Bank Secrecy Act, and the DOJ recommended a $50 million fine. Zhao has been released on a $175 million personal recognizance bond and is scheduled for a sentencing hearing on February 23.
This landmark settlement adds another layer to the regulatory scrutiny faced by cryptocurrency exchanges. Binance, once an obscure name, quickly rose to become the world’s largest crypto exchange. However, regulatory concerns have surrounded the company, with the SEC filing a lawsuit in June alleging that Binance operated an illegal securities exchange.
The outcome of this case has broader implications for the cryptocurrency industry, as regulators signal their intent to enforce compliance and crack down on illicit activities within the rapidly evolving digital asset space.
