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Binance, the world’s largest cryptocurrency exchange by trading volume, has reached a $4.3 billion settlement with the US Securities and Exchange Commission (SEC) and the Department of Justice (DOJ) over allegations of violating anti-money laundering and sanctions laws. As part of the deal, Binance’s founder and CEO, Changpeng Zhao, also known as CZ, has resigned from his position and pleaded guilty to the charges.
According to the SEC’s complaint, Binance operated as an unregistered securities exchange in the US, allowing its customers to trade hundreds of digital assets, some of which were deemed as securities by the regulator. Binance also failed to implement adequate policies and procedures to prevent money laundering, terrorist financing, and sanctions evasion, the complaint alleged. The SEC claimed that Binance facilitated transactions involving illicit funds, such as those linked to the 2017 WannaCry ransomware attack, the 2018 North Korean hacking campaign, and the 2019 PlusToken Ponzi scheme.
The DOJ’s criminal indictment accused CZ and other Binance executives of conspiring to evade US regulations and deceive US authorities by creating a web of deception. The indictment alleged that Binance used a network of shell companies, offshore entities, and third-party service providers to obscure its US presence and activities. Binance also instructed its US customers to use VPNs and other tools to mask their locations and identities, the indictment claimed.
Under the terms of the settlement, Binance agreed to forfeit $2.5 billion of its ill-gotten gains and pay a $1.8 billion civil penalty to the SEC. Binance also agreed to cooperate with the US authorities and implement a comprehensive compliance program. CZ and other Binance executives agreed to plead guilty to one count of conspiracy to violate the Bank Secrecy Act and one count of conspiracy to violate the International Emergency Economic Powers Act. They face up to five years in prison and a $250,000 fine each.
Binance announced that CZ has stepped down as the CEO and will be replaced by Richard Teng, a former regulator and executive at the Singapore Exchange. Teng said that he is honored to lead Binance and committed to restoring trust and confidence in the crypto industry. He also said that Binance will work closely with regulators and partners around the world to ensure compliance and innovation.
The settlement marks a major blow for Binance, which has been facing increasing scrutiny and pressure from regulators in various jurisdictions, including the UK, Japan, Germany, and Hong Kong. Binance has been accused of operating without proper licenses, offering risky products, and failing to protect its customers. Binance has denied any wrongdoing and said that it is committed to complying with local laws and regulations.
The settlement also has significant implications for the crypto industry, which has been growing rapidly in recent years, attracting millions of users and investors. The case shows that the US authorities are serious about enforcing the rules and regulations governing the crypto space, and that they have the power and the will to hold the industry’s leaders accountable. The case also highlights the challenges and risks that crypto exchanges face in operating across multiple jurisdictions and complying with different regulatory regimes.
