Binance, the world's largest cryptocurrency exchange, has agreed to pay a substantial $4.3 billion fine to settle U.S. criminal charges, marking one of the largest penalties ever obtained from a corporate defendant by the U.S. government. This settlement follows allegations that Binance violated sanctions and money-transmitting laws, and failed to maintain an adequate anti-money laundering program.
Changpeng "CZ" Zhao, the founder of Binance, pleaded guilty to charges related to these violations and agreed to pay a personal fine of $50 million. Additionally, he will step down from his role as CEO, with Richard Teng, previously Binance's regional markets head and a former Abu Dhabi regulator, set to take over the leadership position.
The court filing revealed that Binance employees were aware the company was serving thousands of users in sanctioned countries, a direct violation of U.S. law. Attorney General Merrick Garland emphasized the gravity of these actions in a press conference, highlighting the significant size of the settlement.
As part of its plea, Binance is required to appoint an independent compliance monitor for three years and report its compliance efforts to the U.S. government. Zhao is banned from any management or operational involvement in Binance, a prohibition that will last three years following the appointment of the compliance monitor.
This resolution is a major victory for U.S. regulators in their ongoing efforts to enforce compliance in the rapidly evolving cryptocurrency industry. It follows closely on the heels of the conviction of FTX founder Sam Bankman-Fried on fraud and conspiracy charges.
Zhao's prioritization of Binance's growth over regulatory compliance was highlighted in the unsealed filings, where his approach to operating in what he termed the U.S. "Grey zone" and avoiding collecting "know-your-customer" information was cited as a strategy to enhance the company's growth.
Binance, in a blog post, acknowledged the settlements and emphasized its efforts to restructure and adopt new leadership with substantial compliance experience. The company expressed confidence in emerging stronger from this situation, laying a foundation for future success.
Richard Teng, the new CEO, outlined his focus on ensuring users' confidence in Binance's financial strength and security, collaborating with regulators globally, and driving growth and adoption of Web3 technologies.
The Department of Justice's announcement of significant cryptocurrency enforcement actions signals a clear message to the crypto and decentralized finance (DeFi) industry about the importance of regulatory compliance and robust anti-money laundering procedures.