Chzhao will also pay a fine of $50 million.
The world's largest cryptocurrency exchange will pay $4.3 billion to settle a money laundering case initiated by the US Department of Justice. Binance's owner and CEO has admitted to violating laws and agreed to step down - Chzhao must also pay about $50 million in fines.
“Today I stepped down as CEO of Binance,” wrote Changpeng Zhao yesterday on X (formerly Twitter). “The decision was emotionally difficult for me, but I know it is the right one. I have made mistakes and must take responsibility. This will be better for our community, for Binance, and for myself.”
Richard Teng is now acting as CEO - head of regional markets at Binance. The cryptocurrency exchange must also appoint an independent observer.
Despite Chzhao not being able to hold a leadership position at Binance, according to The Wall Street Journal, the terms of the agreement will allow him to maintain a controlling stake in the cryptocurrency exchange.
“Binance facilitated billions of dollars of unregulated cryptocurrency transactions,” said US Attorney General Merrick Garland during a press conference on Tuesday. “The platform serves criminals from around the world using this cryptocurrency exchange to move stolen funds and other criminal proceeds.”
Garland added that Binance facilitated transactions of “nearly” $900 million between the US and Iran, which is under sanctions, while its compliance team was aware that its money laundering protection was “inadequate.”
Earlier, Reuters reported that since 2018, Binance had processed Iranian transactions totaling $7.8 billion.
At the start of the full-scale Russian invasion of Ukraine, Binance CEO Changpeng Zhao stated that the cryptocurrency exchange had complied with initial directives from international governments to restrict individuals under sanctions, but he said that further expansion would be “unethical.” In April 2022, following the announcement of a fifth package of European sanctions, Binance restricted the withdrawal of funds from its services for Russians (in particular, those with assets exceeding €10,000). According to Bloomberg sources, fewer than 50,000 people actually have accounts exceeding the specified amount.
As of November 2022, Binance had 18 trading ruble pairs available and input-output gateways, making it easy to bypass sanctions.
In September 2023, Binance entered into an agreement to sell its entire Russian business to the crypto exchange CommEX, firmly stating that they do not belong to Binance, but refused to disclose the owners' names, as they “do not want publicity.”
The Securities and Exchange Commission (SEC) sued Binance and Zhao for the first time in June, accusing the cryptocurrency exchange of illegal activities in the US and deceiving investors. At the same time, an attempt to freeze the exchange's funds failed.
Binance is just one of the crypto empires targeted by the SEC following the FTX crash, in addition to Coinbase and Kraken.
“Just this past month, the Department of Justice successfully prosecuted the CEOs of the world’s two largest cryptocurrency exchanges in two separate criminal cases,” Garland said. “The message must be clear: using new technologies to break the law does not make you an innovator, it makes you a criminal.”
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