It’s been an eventful week for crypto exchanges and the US government.
Changpeng Zhao, also known as “CZ”, the founder and CEO of Binance, has resigned and pleaded guilty to a series of violations made through the Department of Justice and other US agencies. He appeared in federal court in Seattle on Tuesday to enter his plea.
Richard Teng, Binance’s former global head of regional markets, will be the exchange’s new CEO, Zhao said in a Position on the afternoon of X Tuesday. Teng was previously CEO of the Financial Services Regulatory Authority of Abu Dhabi Global Market, among other executive roles. Responding to his resignation, Zhao said, “it’s the right thing to do” adding, “I made mistakes and I have to take responsibility.” Zhao will remain a shareholder and said he will be “available to the team to consult if needed.”
Binance, the world’s largest crypto exchange, also agreed to pay about $4.3 billion to settle the Justice Department’s investigations, the agency said in a press release on Tuesday.
As part of Binance’s guilty plea, it has also entered into agreements with the Treasury Department’s Financial Crimes Enforcement Network (FinCEN), the Office of Foreign Assets Control (OFAC) and the Commodity Futures Trading Commission (CFTC) and will credit approximately 1 .8 billion dollars toward these resolutions.
The crypto exchange “admits to engaging in anti-money laundering, unauthorized money transmission and sanctions violations,” the Justice Department statement said, calling it the “largest corporate settlement” that included criminal charges against executives. Zhao pleaded guilty to failing to comply with an anti-money laundering program.
“The message here should be clear: using new technology to break the law doesn’t make you disruptive, it makes you a criminal,” US Attorney General Merrick Garland said in a statement.
Binance, Zhao and other related parties “knowingly failed to register as a money service business” and violated the Bank Secrecy Act by failing to implement an anti-money laundering program. archiving for the categories listed. It added that the respective parties allegedly violated US economic sanctions “in a deliberate and calculated attempt to take advantage of the US market” without following US laws.
The crypto exchange collected about $1.35 billion in trading fees from US clients, according to CFTC Chairman Rostin Behnam. According to court documents, Zhao told Binance employees that it was “better to ask for forgiveness than permission” and prioritized the development of the exchange there over compliance with US law.
“Every institution, wherever they are, that wants to reap the benefits of the U.S. financial system must also follow the rules that protect us from terrorists, foreign adversaries and crime or face the consequences,” Treasury Secretary Janet Yellen said. the liberation.
Under Zhao’s plea agreement, he will agree to the recommendation that the court impose a $50 million fine on the CFTC and will not make statements that are “contrary to his acceptance of responsibility,” according to a separate archiving from Monday.
As for Binance’s plea agreement, the company will accept Zhao’s resignation and bar him “from any present or future involvement in the operation” of the business from the beginning of the acceptance of the plea and “expires three years from the date of the appointment of a monitor ». Monday’s filing said. The company will “maintain and enhance” its compliance program and appoint an independent compliance monitor during that three-year period.
The crypto exchange did not respond to multiple requests for comment from TechCrunch about the charges.
Binance was launched in June 2017 and within 180 days it became the largest crypto exchange in the world. It had over $12.65 billion in trading volume in the last 24 hours, 532% higher than the $2 billion in trading volume of the second largest crypto exchange, Coinbase, according to CoinMarketCap data.
This comes less than a day after the SEC the Kraken chargedthe third largest crypto exchange by trading volume, claiming to operate as an “unregistered securities exchange, broker, agent and clearing house”.
Separately, in February, Kraken agreed to end crypto staking services for US customers and settled an earlier SEC lawsuit after agreeing to pay $30 million in “disgorgement, prejudgment interest and civil penalties” charges.
The DOJ’s charges against Binance come more than five months after the US Securities and Exchange Commission accused the exchange and Zhao of lying to regulators about its operations, filing 13 charges against the defendants in federal case. Zhao and Binance were allegedly “intimately” involved in directing the trading entity’s business activities and providing crypto-related services on the Binance.US platform, which it claims is an independent exchange in the SEC filing.
In late March, the US CFTC also filed a lawsuit against Binance, Zhao and Chief Compliance Officer Samuel Lim for allegedly violating trading and derivatives rules.
Binance made headlines this year for a number of reasons, including Zhao’s comments that contributed to the downfall of FTX, which was once one of its top competitors. In April, Binance.US, its US sister company, called off a $1.3 billion deal to buy assets of crypto broker Voyager Digital due to a “hostile and uncertain regulatory climate.”
In August, Checkout.com severed ties with Binance due to concerns over the crypto firm’s alleged issues with anti-money laundering, sanctions and compliance audits. At the time, a Binance spokesperson said it disagreed with “Checkout’s alleged basis for termination and is considering our options for legal action.”
The article has been updated to reflect the latest developments regarding the allegations against Binance and Zhao and includes the former CEO’s statement.
