Changpeng "CZ" Zhao, founder and CEO crypto exchange Binance, agreed to step down and plead guilty as part of a $4.3 billion settlement agreement involving U.S. criminal and civil charges against him and his company.
Significance: Binance, the leading cryptocurrency exchange globally, and it's CEO CZ, a key figure in the industry, have faced a major development — even preceding SBF's involvement.
Breaking News: CZ has opted to plead guilty in a federal court in Seattle for money laundering infractions.
The resolved accusation contends that Binance and CZ prioritized "growth over compliance," enabling the execution of billions of dollars in cryptocurrency transactions for clients without proper implementation of Know-Your-Customer (KYC) procedures.
Public Statements: Treasury Secretary Janet Yellen, during a joint press conference with the Department of Justice (DOJ) announcing the settlement, criticized Binance for neglecting it's legal responsibilities in favor of financial gain.
She asserted, "Binance turned a blind eye to it's legal obligations in the pursuit of profit.
it's willful failures allowed money to flow to terrorists, cybercriminals, and child abusers through it's platform."
U.S. Attorney General Merrick Garland emphasized that the Department of Justice's felony complaint, coupled with various civil enforcement actions against the company, reflects a comprehensive governmental strategy to combat corporate misconduct.
Details: As part of the resolution, CZ has agreed to pay $50 million in fines, which will be directed to the Commodity Futures Trading Commission (CFTC) in connection with the settlement of that particular lawsuit.
In addition to stepping down and pleading guilty, Zhao is also barred from operating or managing the business for the next three years.
Binance has also agreed to plead guilty to a criminal charge related to knowingly violating the Bank Secrecy Act. As part of the settlement agreement, Binance will pay a total of over $4.3 billion, including the largest penalty ever imposed by the U.S. Treasury.
In a statement, Binance acknowledged it's responsibility for past criminal compliance violations and expressed it's intention to move forward from this challenging period of learning and growth.
The company expressed confidence that it will emerge from this experience as a stronger organization, ready to lay the foundation for it's next 50 years.
Richard Teng, the company's former Global Head of Regional Markets, has been named the new CEO, effective immediately.
This settlement resolves a years-long investigation into Binance, which has recently resulted in layoffs and executive departures.
Under the terms of the deal, Binance will pay a $3.4 billion civil monetary penalty to FinCEN, the financial crimes bureau within the Treasury Department. This agreement also includes a five-year monitorship and various measures to strengthen compliance and ensure Binance's complete withdrawal from the U.S.
Binance will also pay an additional $968 million fine to OFAC, the Office of Foreign Assets Control.
"Importantly, the SEC's lawsuit against Binance remains active."