Billionaire Changpeng Zhao and the prominent cryptocurrency exchange, Binance, entered a guilty plea on Tuesday to federal charges, marking a significant development aimed at bringing order to the often turbulent crypto industry.
In a comprehensive settlement across various federal agencies, Binance agreed to pay fines and penalties exceeding $4 billion. As part of the resolution, Zhao, a key figure in the crypto world, committed to stepping down from his role as CEO of the exchange he founded, accompanied by a $200 million fine.
Acknowledging its wrongdoing, Binance, the world’s largest cryptocurrency exchange, admitted to involvement in anti-money laundering, unlicensed money transmitting, and sanctions violations.
This landmark case represents the largest-ever corporate resolution with criminal charges against an executive, according to US officials. Following an extensive investigation, authorities asserted that Binance permitted illicit transactions on its platform, enabling activities ranging from child exploitation and drug trafficking to financing terrorist organizations such as ISIS, Al Qaeda, and Hamas’s Al-Qassam Brigades.
Zhao, with an estimated fortune exceeding $23 billion, pleaded guilty to neglecting the maintenance of an effective anti-money laundering program.
US authorities anticipate that the guilty plea by Binance and its founder, coupled with the recent conviction of FTX co-founder Sam Bankman-Fried, will send a clear deterrent message to wrongdoers within the crypto industry.
Attorney General Merrick Garland stated, “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 US history.”
While Zhao could face a maximum sentence of 10 years, federal guidelines suggest a likely lower term, possibly around 18 months. Zhao agreed to a recommended fine of $50 million, in addition to a $150 million civil penalty, as outlined by the Commodity Futures Trading Commission.
Treasury Secretary Janet Yellen criticized Binance for its “willful failures” that allowed money to flow to terrorists, cybercriminals, and child abusers. The coordinated settlement involved various government agencies, including the Justice Department, FinCEN, OFAC, and the CFTC, with the Treasury describing it as their largest enforcement action in history.
Binance allegedly engaged in processing transactions for customers operating illicit services and laundering proceeds from darknet market transactions, hacks, ransomware, and scams. Prosecutors claimed Binance’s lax anti-money laundering procedures facilitated its ascent to becoming the largest cryptocurrency exchange globally.
The charges, spanning from August 2017 to at least October 2022, accused Binance of knowingly failing to register as a money service business, willfully violating the Bank Secrecy Act, and causing violations of US economic sanctions.
As Binance faces legal consequences, proponents of digital currencies emphasize the predominantly lawful nature of crypto transactions. Nevertheless, top US officials underscored their commitment to monitoring and combating illicit activities in the crypto space.
Deputy Attorney General Lisa Monaco emphasized the government’s relentless approach in using all available tools to combat the misuse of crypto platforms for criminal activities. Some critics argue that more comprehensive regulatory measures are necessary to curb the lawlessness and criminal activities associated with cryptocurrencies.
