Binance and its Chief Executive Changpeng Zhao pleaded guilty to criminal charges for anti-money laundering and U.S. sanctions violations as part of a comprehensive settlement with the U.S. Department of Justice. The deal, which will allow the company to continue operating, will also see Zhao step down as CEO. Binance will pay a fine of $4.3 billion.
In addition to stepping down as CEO, Zhao will pay $200 million in fines as part of the settlement. He appeared in Seattle court earlier today to plead guilty and faces a maximum sentence of 10 years in prison.
In court documents, Binance was accused of money laundering violations, U.S. sanctions violations, and conspiracy to conduct an unlicensed money transfer business. Binance admitted that it failed to prevent and report suspicious transactions carried out by terrorist organizations, including Hamas’ al-Qassam Brigades, Islamic State and Al-Qaeda.
“Binance became the world’s largest cryptocurrency exchange in part because of the crimes it committed. It is now paying one of the heaviest penalties in U.S. history,” said US Attorney General Merrick Garland.
The court filing says Binance authorized transactions worth more than $890 million involving customers in Iran, a country against which the United States has imposed strict financial sanctions. Binance also authorized transactions between U.S. users and their counterparts in other sanctioned jurisdictions, including Cuba, Syria and illegally occupied parts of Ukraine, the indictment says.
“Binance has turned a blind eye to its legal obligations in the pursuit of profit. His deliberate failures allowed money to flow to terrorists, cybercriminals and pedophiles through his platform,” said US Treasury Secretary Janet Yellen. “Historic sanctions and oversight to ensure compliance with U.S. laws and regulations mark an important milestone for the virtual currency industry.”
Zhao also “prioritized Binance’s growth and profits over compliance with U.S. law,” according to the indictment. He acknowledged that the company was operating in what he described as a “gray area,” but he instructed staff that it was “better to ask for forgiveness than for permission,” the indictment says.
Richard Teng, currently Head of Regional Markets at Binance, will take over as CEO. Teng was the CEO of Abu Dhabi Global Market, a financial regulator in the United Arab Emirates. Teng would be a popular choice among Binance staff, according to sources.
