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Crypto giant Binance admits to money laundering, agrees to pay $4.3 billion | Binance
Changpeng Zhao, founder of Binancethe world’s largest cryptocurrency exchange, agreed Tuesday to resign from the company and plead guilty to money laundering.
As part of a guilty plea, Zhao agreed to pay a $50 million fine and would be barred from any involvement with the company. Binance also agreed to plead guilty, accept the appointment of a monitor and pay a criminal fine of nearly $1.81 billion as well as a forfeiture order of $2.51 billion to settle three charges criminals. The U.S. Department of Justice had accused the company of conducting unlicensed money transfer activity, conspiracy and violating the International Emergency Economic Powers Act.
Zhao wrote in a tweet: “Today, I resigned as CEO of Binance. It was certainly not easy to let go emotionally. But I know it’s the right thing to do. I made mistakes and I have to take responsibility for them. This is what’s best for our community, for Binance, and for myself… I don’t see myself going back to being a CEO of a startup.”
Attorney General Merrick Garland said in a news conference that the total $4.3 billion in fines Binance and Zhao agreed to pay as part of their guilty pleas was one of the most severe penalties. heaviest ever obtained by the Department of Justice in a criminal case.
Garland said Zhao “willfully violated federal law that protects against money laundering and terrorist financing.” The Binance boss, he said, pleaded guilty in person Tuesday in Seattle.
“From the beginning, Zhao and other Binance executives engaged in a deliberate and calculated move to take advantage of the U.S. market without implementing the controls required by U.S. law,” Garland said. The U.S. Attorney General has identified millions of dollars in transactions between the United States and Iranian users, users in Syria and Russian-occupied Ukraine, and terrorist groups including the Islamic State.
“Binance knowingly enabled hundreds of millions of dollars in transactions between U.S. users and users subject to U.S. sanctions. Its platform hosted criminals from around the world who used Binance to move stolen funds and other proceeds of crime,” it added.
Treasury Secretary Janet Yellen said U.S. financial regulators have been investigating Binance for more than three years and found that it engaged in “consistent and egregious violations” of U.S. law that “allowed illicit actors to freely transact” on the platform and “supported child sexual abuse, illegal narcotics, and terrorism activities in more than 100,000 transactions.”
Janet Yellen said Binance had posed risks “to the U.S. financial system, American citizens, and our country’s national security for too long.” And she had a message for the cryptocurrency industry: “Let’s be clear, we are also sending a message to the virtual currency industry more generally: today and in the future, virtual currency exchanges and technology companies financial institutions want to benefit from the enormous advantages of being part of the American financial system. They must respect the rules. If they do not, the US government will take action. »
Richard Teng, head of Binance’s regional markets outside the United States, was named CEO of the company following the conclusion of the Justice Department’s remarks.
The announcement is another blow to the cryptocurrency industry. The settlement with Binance comes less than a month after Sam Bankman-Fried was convicted of seven counts of fraud and conspiracy for its role in the collapse of FTX, a trading platform that was second only to Binance in size. The FTX founder faces 115 years in prison when he is sentenced next year.
Zhao, or CZ, played a significant role in FTX’s collapse. He had the opportunity to look at FTX’s books shortly before it collapsed. But he refused to intervene and ensured the collapse of the smaller rival when he tweeted that Binance was exiting its position in FTX’s proprietary token, FTT.
Zhao and Bankman-Fried, although remarkably opposite in character and appearance, had both promised a promising future for digital currencies that some believed could replace sovereign currencies.
But financial regulators and prosecutors didn’t see it that way.
When the charges against Bankman-Fried were announced in December last year, US Attorney Damian Williams said the cryptocurrency exchange’s “phenomenal fall” and subsequent criminal charges were not “not a case of mismanagement or poor oversight, but of intentional fraud.” , clear and simple.
Binance has been under scrutiny from the Justice Department since at least 2018, just one of many legal and regulatory issues it faces in the United States.
Federal prosecutors asked the company in December 2020 to provide internal records about its anti-money laundering efforts, as well as its communications with Zhao.
The financial regulator, the Commodities Futures Trading Commission (CFTC), filed a civil complaint against Binance in March, alleging that it failed to implement an effective anti-money laundering program to detect and prevent the financing of terrorism. Internally, Binance executives and employees acknowledged that the platform facilitated “potentially illegal activities,” the CFTC alleged.
In February 2019, Binance’s former chief compliance officer, Samuel Lim, received information about the Palestinian militant group Hamas’ trading on Binance, the CFTC wrote.
Zhao, a billionaire born in China who came to Canada at age 12, said the CFTC’s “complaint appears to contain an incomplete recitation of the facts, and we disagree with many of the characterizations alleged problems.”