Binance, the biggest cryptocurrency exchange, was fined $4 billion and its CEO admitted to failing to thwart money laundering
Washington, DC The largest cryptocurrency exchange in the world, Binance, suffered a severe blow from the U.S. government on Tuesday when its CEO and founder, Changpeng Zhao, entered a guilty plea to a felony relating to his failure to stop money laundering on the site. Binance agreed to pay a settlement of about $4 billion.
Zhao resigned as the CEO of the business, and Binance acknowledged breaking the Bank Secrecy Act as well as possibly breaking sanctions laws by failing to set up procedures for reporting suspicious transactions.
“Using new technology to break the law does not make you a disruptor, it makes you a criminal,” said U.S. Attorney General Merrick Garland, who called the settlement one of the largest corporate penalties in the nation’s history.
As part of the settlement agreement, the U.S. Treasury said Binance will be subject to five years of monitoring and “significant compliance undertakings, including to ensure Binance’s complete exit from the United States.” Binance is a Cayman Islands limited liability company.
The cryptocurrency industry has been marred by scandals and market meltdowns.
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Sam Bankman-Fried, the 31-year-old creator of FTX, the second-largest cryptocurrency exchange before it crashed last November, was Zhao’s most well-known competitor. This month, Bankman-Fried was found guilty of fraud for swindling at least $10 billion from investors and customers.
In the meantime, Zhao entered a guilty plea to one count of failing to keep up an efficient anti-money-laundering program on Tuesday in a federal court in Seattle.
Inquiring about Zhao’s comprehension of the plea deal, Magistrate Judge Brian A. Tsuchida once said, “You knew you didn’t have controls in place.”
“Yes, your honour,” he answered respectfully.
As it swiftly expanded to become the largest cryptocurrency exchange in the world, Binance said in a statement that it made “misguided decisions” and that the settlement acknowledged its “responsibility for historical, criminal compliance violations.”
“Binance processes transitions by illicit actors,’supporting activities from child sexual abuse, to illegal narcotics, to terrorism, across more than 100,000 transactions,” according to U.S. Treasury Secretary Janet Yellen.
According to Yellen, Binance did not report any suspicious activity about those transactions, and the company permitted over 1.5 million virtual currency exchanges that were against U.S. sanctions, including those involving al-Qaeda, Hamas’ al-Qassam Brigades, and other criminal organizations.
Zhao’s sentencing was scheduled for February 23 by the judge, but it’s likely to be postponed. He might receive a sentence under guidelines of up to eighteen months.
Zhao voluntarily turned himself in despite the fact that the United Arab Emirates, where he resides, does not have an extradition treaty with the United States, according to one of his lawyers, Mark Bartlett. Zhao has been aware of the inquiry since December 2020.
Bartlett stated, “He made the decision to come here and face the consequences.” He’s seated in this position. He entered a guilty plea.
Married and with small children in the United Arab Emirates, Zhao pledged he would return to the United States for sentencing if granted permission to remain there in the interim.
Zhao uttered, “I want to accept responsibility and close this chapter in my life.” “I would like to return. If not, I wouldn’t be here right now.
In the past, Zhao has been accused of misappropriating client cash, hiding the fact that the business was combining billions of dollars’ worth of investor assets, and transferring those assets to a third party that Zhao also owned.
Binance invested in FTX when Bankman-Fried started the exchange in 2019, and Zhao and Bankman-Fried were once amicable rivals in the industry. But their relationship soured, to the point where Zhao said in early November 2022 that he was selling all of his bitcoin holdings in FTX. A week later, FTX filed for bankruptcy.
In February, a senior executive at Binance informed the Wall Street Journal that the business anticipated having to pay fines in order to end US probes.
