Changpeng Zhao, founder and CEO of Binance, the world’s largest cryptocurrency exchange, has reportedly agreed to step down and plead guilty to violating criminal U.S. anti-money laundering requirements.
The deal, which also includes Binance pleading guilty to a criminal charge and paying fines totaling $4.3 billion, aims to resolve long-running investigations into the exchange, The Wall Street Journal (WSJ) reported Tuesday (Nov. 21).
Binance added in the post that it reached resolutions with the Department of Justice (DOJ), Commodity Futures Trading Commission (CFTC), Office of Foreign Assets Control and Financial Crimes Enforcement Network regarding their investigations into registration, compliance and sanctions issues.
The company said in the post that these U.S. agencies do not allege that Binance misappropriated any user funds nor that it engaged in any market manipulation.
However, when the company was first launched, it did not have adequate compliance controls in place, Binance said in the post.
“Binance grew at an extremely fast pace globally, in a new and evolving industry that was in the early stages of regulation, and Binance made misguided decisions along the way,” the company said in the post. “Today, Binance takes responsibility for this past chapter.”
Zhao established Binance in 2017 and transformed it into a global crypto market powerhouse, according to the WSJ report.
However, the company has been under scrutiny, especially in the United States, where it faced multiple investigations, the report said. These probes have cast a shadow over Binance’s operations, leading to executive departures and layoffs as the company grappled with the challenges posed by the investigations.
As part of the agreement, Zhao will relinquish his executive role at Binance but will retain majority ownership of the company, per the report. The guilty plea and payment of fines aim to settle several criminal and civil allegations made by regulators.
The reported outcome of this case draws parallels to a previous case involving BitMEX, another cryptocurrency exchange, where the former CEO pleaded guilty to violating anti-money laundering laws and received probation instead of a prison term, according to the report.
While the Binance deal addresses several charges, it does not include a settlement with the Securities and Exchange Commission (SEC), which sued Binance and Zhao in June for alleged violations of U.S. investor-protection laws, the report said. Binance, like some other major crypto exchanges, has chosen to litigate with the SEC, aiming to demonstrate that cryptocurrencies do not fall under the SEC’s purview as traditional investments.
The DOJ investigations into Binance have focused on its anti-money laundering program and whether it allowed individuals from sanctioned countries to trade with Americans on the platform, per the report.
Additionally, a civil lawsuit filed by the CFTC against Binance and Zhao earlier this year would also be resolved, according to the report. The CFTC claimed that Binance lacked a program to prevent terrorist financing and money laundering while providing Americans access to derivatives that should only be traded on regulated platforms.