US Imposes Over $4 Billion Penalty on Binance as CEO Changpeng Zhao Pleads Guilty
In a significant development, Changpeng Zhao, the CEO of Binance, has stepped down and pleaded guilty to money laundering breaches in a deal that involves the cryptocurrency exchange paying over $4 billion in penalties, according to prosecutors.
The Department of Justice revealed that Binance, under Zhao’s leadership, committed crimes that contributed to its status as the world’s largest cryptocurrency exchange. Attorney General Merrick Garland stated, “Binance became the world’s largest cryptocurrency exchange in part because of the crimes it committed –- now it is paying one of the largest corporate penalties in US history.”
The charges include a failure to maintain an effective anti-money laundering program, and Garland emphasized that Binance not only failed to comply with federal law but also pretended to comply.
Changpeng Zhao took to his official X account to announce his resignation, stating, “Today, I stepped down as CEO of Binance. Admittedly, it was not easy to let go emotionally. But I know it is the right thing to do. I made mistakes, and I must take responsibility.” As part of his plea, Zhao agreed to pay a $50 million penalty.
The penalties imposed on Binance by the Treasury Department’s agencies include a civil money penalty of $3.4 billion and a $968 million penalty involving OFAC, marking the agencies’ largest settlements in history.
Treasury Secretary Janet Yellen condemned Binance’s actions, stating that the exchange turned a blind eye to its legal obligations, allowing funds to flow to terrorists, cybercriminals, and child abusers. She emphasized that Binance deliberately undermined its own sanctions monitoring controls, authorizing over 1.5 million virtual currency trades that violated US sanctions and failing to report suspicious transactions.
Yellen described the penalties and the five-year monitorship imposed on Binance as a “milestone for the virtual currency industry.” The violations included negligence in preventing and reporting transactions with groups like ISIS, as well as matching trades between US users and those in sanctioned jurisdictions like Iran and North Korea.
To address these issues, Binance is required to file suspicious activity reports as mandated by law and review past transactions to report any illicit activity to authorities. Garland stated that this would advance criminal investigations into malicious cyber activity and terrorism fundraising, particularly the use of cryptocurrency exchanges to support groups like Hamas.
