The CEO of Binance, the world’s largest cryptocurrency exchange, is set to step down and plead guilty to violating U.S. anti-money-laundering laws in a move that aims to secure the company’s continued operation, as per sources familiar with the situation.
Changpeng Zhao, the founder of Binance, is slated to make a court appearance in Seattle to enter his guilty plea. The exchange, under Zhao’s ownership, will also plead guilty to a criminal charge and consent to paying fines totaling $4.3 billion. This amount includes settlements for civil allegations raised by regulators.
This agreement is anticipated to bring an end to the prolonged investigations into Binance, which Zhao established in 2017 and transformed into a pivotal player in the global cryptocurrency market. Despite facing challenges, including the departure of executives and layoffs, Binance maintained its market share, particularly after the downfall of FTX, a key offshore competitor, last year.
As part of the deal, Zhao will retain majority ownership of Binance but will be barred from holding an executive position within the company. Sentencing for Zhao is scheduled for a later date.
This development mirrors a previous case involving BitMEX, where the CEO pleaded guilty to anti-money-laundering violations and received a two-year probation sentence.
The announced deal does not encompass a settlement with the Securities and Exchange Commission (SEC), which filed a lawsuit against Binance and Zhao in June, alleging violations of U.S. investor-protection laws. Notably, major crypto exchanges like Binance have opted to contest SEC lawsuits, asserting that cryptocurrencies fall outside the SEC’s regulatory scope.
The U.S. Department of Justice (DOJ) investigation scrutinized Binance’s anti-money-laundering program, examining whether it allowed individuals in sanctioned countries to trade with Americans on the platform. This includes countries like Iran and Russia.
A separate component of the agreement will address a civil lawsuit filed by the Commodity Futures Trading Commission (CFTC) against Binance and Zhao earlier this year. The $4.3 billion settlement will cover claims by the CFTC and agencies of the Treasury Department. The CFTC had alleged that Binance lacked a program to prevent terrorist financing and money laundering while providing Americans access to derivatives in violation of regulatory requirements.
Zhao, currently residing in the United Arab Emirates, has limited his travel this year. Although the UAE lacks an extradition treaty with the U.S., a treaty signed last year enhances law enforcement evidence sharing between the two countries. The UAE has maintained a welcoming stance toward crypto, contrasting with regulatory crackdowns in other countries. Zhao’s status was reportedly a point of contention in negotiations between the UAE government and Binance.