In a pivotal moment in the crypto industry’s history, Changpeng “CZ” Zhao, the founder and CEO of Binance, agreed on Tuesday to step down and pleaded guilty to willfully violating the Bank Secrecy Act. This development comes as one of the most anticipated investigations unfolds, with significant repercussions for Binance, the world’s largest cryptocurrency exchange by volume.
As part of the settlement, Binance has also agreed to plead guilty and pay a substantial $4.3 billion in fines and restitution, making it one of the largest payments ever received by the Department of Justice from a corporate entity, according to Attorney General Merrick Garland. Additionally, Zhao will personally pay $50 million for his violations, and Binance has committed to retaining an independent compliance monitor for three years.
Attorney General Garland, along with Treasury Secretary Janet Yellen and Rostin Benham, the head of the Commodity Futures Trading Commission, jointly announced the settlement details. Garland emphasized that Binance’s ascent to becoming the world’s largest cryptocurrency exchange was partly due to criminal activities, and the imposed penalties reflect one of the largest in U.S. corporate history.
Zhao entered his guilty plea in person in the U.S. on Tuesday, admitting to willfully violating the Bank Secrecy Act. The charges revolve around Binance’s deliberate and calculated effort to profit from the U.S. market while evading regulatory controls. Garland accused Binance of accommodating criminals worldwide and turning a blind eye to legal obligations in pursuit of profit.
Treasury Secretary Yellen added that Binance’s willful failures allowed money to flow to terrorists, cybercriminals, and child abusers through its platform.
In response to the settlement, Binance released a statement on X (formerly Twitter), expressing satisfaction with reaching a resolution with several U.S. agencies. The company acknowledged the challenges faced and emphasized the transformative learning that has strengthened its platform.
The settlement marks an extraordinary fall for Zhao, especially coming shortly after Sam Bankman-Fried’s conviction on charges of fraud, conspiracy, and money laundering. Both Zhao and Bankman-Fried had been symbols of the immense profits within the digital assets business.
Following the settlement, Binance announced Richard Teng, its former Global Head of Regional Markets, as the new CEO. Teng, with a background as the CEO of the Financial Services Regulatory Authority at Abu Dhabi Global Market and the Chief Regulatory Officer of the Singapore Exchange (SGX), expressed a commitment to working with regulators to uphold high standards globally.
As the cryptocurrency market faced uncertainties amid the settlement announcement, BNB, Binance’s affiliated coin, initially fell about 9% but rebounded slightly after reports of the settlement. Bitcoin also experienced a temporary dip but recovered following The Wall Street Journal’s report.
The aftermath of this settlement will likely reshape the cryptocurrency industry, setting a precedent for regulatory actions against major platforms. The appointment of a new CEO and Binance’s commitment to compliance reflect a shift toward fostering innovation while ensuring consumer protections. The plea deal framework allows Zhao to remain available for consultation as needed, signaling a transition period for Binance in the wake of these significant legal developments.