Changpeng Zhao (CZ), the founder of Binance, has consented to step down and plead guilty to charges of violating US anti-money laundering regulations.
A complete withdrawal from the US market is on the horizon as part of Binance’s settlement with the Financial Crimes Enforcement Network (FinCEN).
Binance, one of the leading cryptocurrency exchanges, is set to pay an unprecedented $4.3 billion in fines, marking a historic financial penalty and one of the largest in the realm of US criminal penalties.
Binance’s financial commitment involves a payment of $1.81 million within 15 months and a substantial forfeiture of $2.51 billion, forming part of the agreement with the Justice Department.
CZ himself will bear a personal fine of $50 million and could potentially face up to 18 months in prison under federal sentencing guidelines, with the possibility of a more severe penalty still on the table, according to senior Justice Department officials.
The former Chief Compliance Officer of Binance, Samuel Lim, is also implicated in the settlement.
CZ took to the X (formerly known as Twitter) to share his views.
The Department of Justice reveals that Binance was involved in facilitating transactions exceeding $900 million between US and Iranian users, contravening strict US sanctions against Iran.
Allegations include acceptance of significant sums from illicit sources, such as the dark marketplace Hydra and the now-outlawed crypto mixing platform ‘Best Mixer.’
Binance is accused of misleading authorities by allowing high-volume American users to continue transactions on the platform.
CZ today appeared in a Seattle federal court, entered a plea, and was subsequently released on a record $175 million personal recognisance bond.
He is allowed to return to Dubai, following bail, and has the next hearing is scheduled for February 23, 2024.
Binance is faced with three criminal charges, namely, operating an unlicensed money transmitting business, violating the International Emergency Economic Powers Act, and conspiracy charges.
As part of the $4 billion settlement with the Department of Justice and the Commodity Futures Trading Commission (CFTC), Binance anticipates a substantial overhaul.
Richard Teng, Binance’s head of regional markets outside the US, has been introduced as CZ’s successor.
He has taken to the X (formerly known as Twitter) to share his thoughts on succeeding the role.
Moving forward, Binance plans to implement governance changes with the introduction of a new board and has committed to submit to a US-based third-party monitor.
This monitor will be appointed on a five-year term to oversee its sanctions compliance program, granting the US Treasury Department access to its records and systems during this period.
Binance.US, being a seperate entity from Binance Global, will be unaffected.
On November 9, Binance executed a transfer of approximately $3.9 billion USDT between wallets.
Approximately $3.9bn USDT from its Binance-Cold 2 wallet on Tron was moved to its Binance 3 hot wallet.
This had marked the 8th biggest all-time USDT transaction on the Tron network,
From Binance 3, $300m in USDT was then sent to Binance-Hot 7, leaving approximately $3.6bn in Binance 3.
While unclear if this is related to the settlement penalty, the exactitude of the amount involved suggests that it might be.
Binance’s market value took a hit, down by 11.75% in the last 10 hours, currently trading at $229.1, reflecting the repercussions of CZ’s guilty plea.
Following this persecution of Binance, there appears to be greater regulatory scrutiny from the US government in relation to cryptocurrency exchanges.
While not currently on the CFTC and DOJ’s radar, the SEC has charged Kraken, alleging the operation of an unregistered securities exchange, broker, dealer, and clearing agency.
In its claims, it has included specific cryptocurrencies, including Solana (SOL), Cardano (ADA), Polygon (MATIC), Internet Computer (ICP), Cosmos (ATOM), Algorand (ALGO), Sandbox (SAND), Decentraland (MANA), and Chili (CHZ), to be targeted as securities in the lawsuit against Kraken.
The exchange vehemently contests this claim, pledging a robust defense.