Binance CEO, Changpeng Zhao (CZ), is stepping down from his role after admitting to engaging in anti-money laundering, unlicensed money transmitting, and sanctions violations.
Zhao entered into a plea deal with the Commodity Futures Trading Commission (CFTC) and the cryptocurrency exchange he led will pay more than $4 billion in fines and other penalties, while in addition to stepping down, CZ will pay $200 million in fines.
According to CZ , he will be replaced by Richard Teng, who formerly served as Global Head of Regional Markets, as the company looks to chart a new future.
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. This is best for our community, for Binance, and for myself.
Binance is no longer a baby. It is…
— CZ 🔶 Binance (@cz_binance) November 21, 2023
Following a prolonged investigation, U.S. authorities led by the Commodity Futures Trading Commission (CFTC) have accused Binance of permitting illicit transactions on its platform, allegedly enabling various illegal activities such as child sex abuse, narcotics, and financing for terrorist organizations like ISIS, Al Qaeda, and Hamas’s Al-Qassam Brigades.
“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,” Attorney General Merrick Garland said in a statement.
“When Binance first launched, it did not have compliance controls adequate for the company that it was quickly becoming, and it should have. Binance grew at an extremely fast pace globally, in a new and evolving industry that was in the early stages of regulation, and Binance made misguided decisions along the way. Today, Binance takes responsibility for this past chapter.”
– Binance
Zhao could potentially face a maximum prison term of 10 years, but the expected sentence is anticipated to be considerably less, possibly around 18 months, in accordance with federal guidelines. The final sentencing decision rests with the judge overseeing the case.
Binance, which has actively been enhancing its compliance and security measures, will have to forfeit $1.35 billion in unlawfully obtained profits and settle a $1.35 billion civil monetary penalty to the CFTC.
“Binance turned a blind eye to its legal obligations in the pursuit of profits,” Treasury Secretary Janet Yellen said in a statement.
“Its willful failures allowed money to flow to terrorists, cybercriminals and child abusers through its platform.”
The U.S. Federal government also issued a warning to the rest of the cryptocurrency industry:
.@SecYellen's message (threat) to the crypto industry pic.twitter.com/yFTkaQ6XEb
— Bankless (@BanklessHQ) November 21, 2023
Serving as a warning to other crypto players, Janet Yellen, the Secretary of Treasury, United States, said:
“Today’s actions hold Binance accountable for its wrongdoing by ensuring Binance leaves the U.S. market and sending a clear message to bad actors in the virtual currency industry.
If virtual currency exchanges and financial technology firms wish to realize the tremendous benefits of being part of the U.S. financial system and serving U.S. customers, they must play by the rules. And if they do not, the U.S. government will act.”
– U.S. Treasury Secretary, Janet Yellen
Today we announced the largest enforcement action in Treasury’s history against Binance, the world’s largest virtual currency exchange. https://t.co/LJ78JRN1z8
— Secretary Janet Yellen (@SecYellen) November 21, 2023
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