Binance CEO Changpeng Chao has pleaded guilty to criminal charges and plans to step down as CEO of the company as part of a $4.3 billion settlement with the Department of Justice, according to court documents. A plea deal with the government resolves a multi-year investigation into the world’s largest cryptocurrency exchange.
Mr. Zhao et al. violated the Bank Secrecy Act by failing to implement an effective anti-money laundering program, and “a deliberate and deliberate attempt to profit from the U.S. market without implementing controls required by U.S. law.” He is charged with “intentionally violating U.S. economic sanctions through a calculated effort.” ” According to the Department of Justice.
According to the plea agreement, the former Binance CEO will plead guilty to violating the Bank Secrecy Act and causing a financial institution to violate the Bank Secrecy Act. The Justice Department has also recommended that the court impose a $50 million fine on Zhao.
Binance will continue to operate, but with new ground rules. Companies are required to maintain and strengthen their compliance programs to ensure that their operations comply with U.S. anti-money laundering standards. Companies must appoint an independent compliance monitor.
The lawsuit against Binance, which was unsealed on Tuesday afternoon, shows that Binance faces three criminal charges, including conspiracy, operating an unauthorized money transfer operation, and violating the International Emergency Economic Powers Act. .
Binance agreed to forfeit $2.5 billion to the government and pay a $1.8 billion fine.
Binance will continue to operate, but with new ground rules. Companies must maintain and strengthen their compliance programs to ensure that their operations comply with U.S. anti-money laundering standards. The company will also be required to appoint an independent compliance monitor.
The U.S. Department of Justice said in a Tuesday filing that Binance “knowingly and knowingly” caused the provision of services to Iran in violation of U.S. sanctions.It is as follows report Binance reportedly processed billions of dollars worth of Iranian transactions.
CNBC reached out to Zhao for comment, but he did not immediately respond. Binance did not respond to several requests for comment from CNBC.
The charges follow civil lawsuits filed earlier this year by both the Securities and Exchange Commission and the Commodity Futures Trading Commission.
Binance has been at the center of intense regulatory scrutiny for the way it operates, with officials in multiple jurisdictions questioning the company’s aggressive approach to entering certain markets without authority, as well as illegal trading practices. has expressed concern over the alleged involvement of money laundering, securities fraud, etc.
In June, the Securities and Exchange Commission filed a major lawsuit against Binance, accusing it of operating an illegal stock exchange and mishandling customer funds. Shortly thereafter, the SEC filed a similar lawsuit against rival exchange Coinbase, alleging that the company was operating as an unauthorized stock exchange, broker, and clearinghouse.
And just this week, the SEC sued Kraken, alleging that the exchange mixed $33 billion in customers’ crypto assets with its own assets, potentially putting users at risk of significant loss.
In the 13 charges filed by the SEC against Binance, the agency accused Binance of commingling billions of dollars in customer funds with Binance’s own funds, similar to the charges against bankrupt cryptocurrency exchange FTX. . SEC Chairman Gary Gensler added, “Zhao and the Binance companies engaged in widespread deception, conflicts of interest, lack of disclosure, and systematic circumvention of the law.”
Founded in 2017 by a Chinese-born entrepreneur, Binance has grown from a relatively unknown name to a major force in cryptocurrencies in a matter of weeks. To this day, Binance is the world’s largest cryptocurrency exchange, processing billions of dollars in trading volume each year. The exchange has taken an aggressive approach to growth and rapidly expanded its reach globally without first obtaining permission.
Although the holding company is based in the Cayman Islands, Binance does not have a single global headquarters, and Chao has said he wants the platform to operate on a “decentralized” operating model, often resisting calls to do so. I’ve been doing it.
In 2021, the UK’s Financial Conduct Authority banned Binance’s UK unit from operating in the country, saying it was not authorized to carry out regulated activities. More recently, Binance withdrew its plans to seek a full license in the UK after regulators said its customer tracking and anti-money laundering practices did not meet regulatory requirements.
In the CFTC’s complaint, the regulator alleges that Binance, Mr. Chao, and the company’s former chief compliance officer Samuel Lim operated an “illegal” exchange, implemented a “sham” compliance program, and violated the law. It was alleged that the transaction violated the Commodity Exchange Act, including the following: Designed to prevent and detect money laundering and terrorist financing. ”
Binance and Chao filed a motion to dismiss the CFTC lawsuit in July. The exchange’s U.S. arm is also pushing back against the SEC’s lawsuit, filing a nondisclosure order against what it calls the agency’s “fishing expedition.”
Of particular concern to the crypto industry is the impact of crypto authorities’ crackdown on cryptocurrencies, not only on exchanges but also on countless tokens and blockchains. The SEC claims that some of the tokens that Binance and Coinbase offer on their platforms, such as Solana’s sol, Cardano’s ada, and Polygon’s matic, are securities that should be registered with the SEC.
— CNBC’s Kevin Bruninger contributed to this report.
