World’s Largest Cryptocurrency Exchange Faces Leadership Shake-Up and Record Corporate Penalty
In a groundbreaking agreement with the U.S. Department of Justice, Binance, the world’s leading cryptocurrency exchange, and its chief executive, Changpeng Zhao, have pleaded guilty to criminal charges related to anti-money laundering and violations of U.S. sanctions. The comprehensive deal, valued at $4.3 billion, allows the company to continue its operations but requires Zhao to step down as CEO and pay fines totaling $200 million.
The courtroom drama unfolded as Zhao appeared in Seattle to enter his guilty plea, facing a potential maximum sentence of 10 years in prison. The charges against Binance include money-laundering violations, violations of U.S. sanctions, and conspiracy to conduct an unlicensed money-transmitting business.
Court documents revealed that Binance failed to prevent and report suspicious transactions involving terrorist organizations, such as Hamas’ al-Qassam Brigades, the Islamic State, and al Qaeda. U.S. Attorney General Merrick Garland commented, “Binance became the world’s largest cryptocurrency exchange in part because of the crimes it committed—now it is paying one of the largest corporate penalties in U.S. history.”
The indictment disclosed that Binance allowed transactions exceeding $890 million with customers in Iran, a country facing strict U.S. financial sanctions. Additionally, the exchange facilitated transactions between U.S. users and counterparts in other sanctioned regions, including Cuba, Syria, and illegally occupied areas of Ukraine.
U.S. Treasury Secretary Janet Yellen emphasized that Binance’s willful failures enabled money to flow to terrorists, cybercriminals, and child abusers through its platform. The historic penalties imposed on Binance, along with a monitoring mechanism for compliance, are described as a milestone for the virtual currency industry.
Today, I stepped down as CEO of Binance. 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.— CZ 🔶 Binance (@cz_binance) November 21, 2023
Binance is no longer a baby. It is…
Changpeng Zhao, who allegedly prioritized growth and profits over compliance with U.S. law, acknowledged that Binance operated in a “grey zone” but instructed staff to adopt a “better to ask for forgiveness than permission” approach.
Richard Teng, the current head of regional markets at Binance and former CEO of Abu Dhabi Global Market, will assume the role of CEO following Zhao’s departure. Teng’s appointment is met with approval among Binance staff, according to sources.
The cryptocurrency giant also faces two civil lawsuits in the U.S., filed by the Commodities and Futures Trading Commission (CFTC) and Securities and Exchange Commission (SEC), alleging commingling of customer assets, anti-money laundering violations, and artificially inflating trading volumes.
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