Changpeng Zhao has reached a settlement with the US amid allegations his crypto platform failed to stop money laundering. Binance is the world’s biggest crypto exchange by trading volume.
The founder of Binance, the world’s largest cryptocurrency exchange, pleaded guilty on Tuesday to a felony charge concerning his failure to prevent money laundering on the platform, US authorities said.
Founder Changpeng Zhao also announced he was stepping down as CEO of the exchange.
US authorities said Binance deliberately withheld information from law enforcement, undermined sanctions controls and failed to report suspicious transactions, including child sexual abuse, illegal drugs and terrorism.
What are the accusations against Binance?
The US Treasury announced on Tuesday the “largest settlements in history” with Binance, over the accusations against the exchange platform.
The Treasury said Binance settled with US agencies for violations of the Bank Secrecy Act, as well as “apparent violations of multiple sanctions programs.”
The exchange platform is accused of failing to prevent and report suspicious terrorist transactions including by Palestinian militant-Islamist group Hamas’ armed wing al-Qassam Brigades, Palestinian Islamic Jihad (PIJ), al-Qaeda and the “Islamic State” (IS).
The Treasury also accused Binance of not reporting or preventing transactions by ransomware attackers and money launderers.
The platform also allegedly connected traders between US users and others in sanctioned jurisdictions including Iran, North Korea, Syria and the Crimea region.
“Binance turned a blind eye to its legal obligations in the pursuit of profit. Its willful failures allowed money to flow to terrorists, cybercriminals, and child abusers through its platform,” said US Treasury Secretary Yellen.
What do we know about the settlement agreement?
Yellen said that the penalties and monitorship on the platform shows that “any institution, wherever located, that wants to reap the benefits of the US financial system must also play by the rules that keep us all safe from terrorists, foreign adversaries, and crime, or face the consequences.”
Binance reached a settlement agreement with the Financial Crimes Enforcement Network (FinCEN) to pay a penalty of $3.4 billion (approximately €3.12 billion). The agreement also puts the platform under a five-year mentorship and ensures its complete exit from the US.
Binance will also pay another penalty of $968 million.
In a social media post announcing he was stepping down as CEO, Binance founder Zhao boasted that “in our resolutions with the US agencies, they do not allege that Binance misappropriated any user funds, and do not allege that Binance engaged in any market manipulation.”
The cryptocurrency industry has been struck several blows in recent years, most notably with the collapse of FTX, once a leading crypto exchange, and the conviction of its founder Sam Bankman-Fried, who was found guilty of fraud earlier this month.