Cryptocurrency Fraud , Fraud Management & Cybercrime

Binance Chief Resigns in Money Laundering Plea Deal

World's Largest Cryptocurrency Exchange Will Pay $4.3 Billion
Binance Chief Resigns in Money Laundering Plea Deal
Binance will pay $4.3 billion in fines and forfeiture to resolve some U.S. federal investigations. (Image: Shutterstock)

Binance Chief Executive Changpeng Zhao will plead guilty to violating anti-money laundering statutes in U.S. federal court in a settlement ending an investigation into illicit transactions at the world's largest cryptocurrency exchange. The company will pay $4.3 billion in fines and forfeiture.

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Newly unsealed court documents show Zhao, 46, intends to enter a guilty plea in Seattle federal court in a deal that requires him to step down from Binance and pay a $50 million fine. He faces sentencing at an unscheduled date. Binance's fine resolves claims from the Commodity Futures Trading Commission and the Department of the Treasury.

The Wall Street Journal reported the settlement does not resolve a lawsuit from the Securities and Exchange Commission (see: US SEC Sues Binance and Coinbase Over Securities Violations). The plea agreement with Zhao allows him to retain majority ownership in Binance, the newspaper also reported, albeit without any operational or managerial role for the next three years.

Reuters reported that Binance has been under federal scrutiny since 2018, just a year after its founding in 2017.

Federal regulators have clamped down on the freewheeling world of digital currency in criminal prosecutions and civil lawsuits that gained momentum in 2022. Zhao's plea ensures he will avoid trial. Sam Bankman-Fried, a fellow former cryptocurrency chieftain, recently stood trial on fraud and money laundering charges and now faces decades in federal prison following a jury conviction earlier this month (see: Convicted: 'King of Crypto' Bankman-Fried Now King of Fraud).

The Binance plea agreement requires the company to plead guilty to knowingly participating in an unlicensed money transmitting business and to violating sanctions preventing unlicensed business dealings with Iranian nationals.

The cryptocurrency exchange has recently faced multiple problems, including an exodus of executives and declining trading volume. Bloomberg in late October reported that trading volumes are down by 38% this year. The decrease took a bite out of Zhao's personal fortune, wiping $11.9 billion from his putative wealth, which dropped it down to $17.2 billion, Bloomberg also reported.


About the Author

David Perera

David Perera

Editorial Director, News, ISMG

Perera is editorial director for news at Information Security Media Group. He previously covered privacy and data security for outlets including MLex and Politico.




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