two gold bitcoins sitting next to a binance sign

Binance CEO and Founder Plead Guilty in Landmark Money Laundering Case: World’s Largest Cryptocurrency Exchange to Pay Over $4 Billion in Historic Settlement

Last Updated on: 22nd November 2023, 02:57 pm

Binance CEO and Founder Plead Guilty in Landmark Money Laundering Case: World’s Largest Cryptocurrency Exchange to Pay Over $4 Billion in Historic Settlement

In a groundbreaking development, the CEO of the world’s largest cryptocurrency exchange, Binance, and its billionaire founder Changpeng Zhao pleaded guilty to federal charges related to money laundering violations. This move is part of a coordinated settlement with various U.S. government agencies aimed at bringing order to the often-lawless cryptocurrency industry.

As a result of the settlement, Binance has agreed to pay over $4 billion in fines and penalties. Changpeng Zhao, a prominent figure in the crypto world, will step down as CEO and pay $200 million in fines. Binance, admitting to engaging in anti-money laundering, unlicensed money transmitting, and sanctions violations, faces the largest-ever corporate resolution with criminal charges for an executive.

U.S. officials, after a lengthy investigation, allege that Binance allowed illicit transactions on its platform, enabling activities ranging from child exploitation and narcotics to terrorist financing for groups like ISIS, Al Qaeda, and Hamas’s Al-Qassam Brigades.

Changpeng Zhao, with an estimated fortune exceeding $23 billion, pleaded guilty to failing to maintain an effective anti-money laundering program. U.S. authorities aim to send a strong message to bad actors in the crypto industry with this guilty plea, following the recent conviction of FTX co-founder Sam Bankman-Fried.

Attorney General Merrick Garland commented, “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 U.S. history.”

Changpeng Zhao could face a maximum of 10 years in prison, with federal guidelines suggesting a lower sentence. According to the plea deal, he is set to pay a $50 million fine and an additional $150 million in civil penalties.

Treasury Secretary Janet Yellen criticized Binance, stating, “Its willful failures allowed money to flow to terrorists, cybercriminals, and child abusers through its platform.”

The guilty plea is part of a comprehensive settlement with various government agencies, including the Justice Department, FinCEN, OFAC, and the CFTC. The Treasury described it as its largest enforcement action in history.

Binance allegedly processed transactions for illicit services and “laundered proceeds of darknet market transactions, hacks, ransomware, and scams.” Prosecutors argue that Binance’s lax anti-money laundering procedures contributed to its rise as the leading cryptocurrency exchange.

Proponents of digital currencies emphasize the legitimacy of the majority of crypto transactions. However, U.S. officials underline their commitment to closely monitoring illicit activities in the crypto space.

The legal troubles for Binance come on the heels of the collapse of another crypto exchange, FTX, and the conviction of its founder Sam Bankman-Fried on fraud charges. The U.S. Justice Department is taking an aggressive approach to combat financial crimes involving cryptocurrencies.

Changpeng Zhao has stepped down as CEO, with Richard Teng taking over the position. Binance acknowledged its past mistakes, stating, “Binance turned a blind eye to its legal obligations in the pursuit of profits.”

The saga continues as Binance faces civil cases from U.S. market regulators, alleging illegal exchange operations for unregistered securities. The SEC has sued Binance for an “extensive web of deception, conflicts of interest, lack of disclosure, and calculated evasion of the law.” Binance, however, contends that it isn’t subject to U.S. laws due to the lack of a physical headquarters in the country.

This story will be updated with further developments.

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