Binance CEO pleads guilty to money laundering violations, will resign

Binance founder Changpeng Zhao (CZ) will resign as CEO and plead guilty to criminal charges and pay a $50 million fine, according to court documents made public Tuesday. The Justice Department is expected to announce a $4 billion settlement with Binance this afternoon, ending a bitter legal battle between the United States and the world’s largest crypto exchange.

Binance US may live to trade another day, but not with CZ at the helm. New details emerged Tuesday regarding a $4 billion settlement to resolve a March lawsuit filed by the Commodity Future Trading Commission and the Justice Department’s investigation into Binance. CZ will no longer run Binance, but he still retains a majority stake in the company.

Binance was charged with three counts, including money laundering violations and violations of US sanctions. The documents allege that Binance knowingly and willingly participated in transactions between the United States and Iran worth $848 million. As a result, the crypto exchange will also have to follow new compliance regulations.

The Justice Department did not immediately respond to Gizmodo’s request for comment.

In March, the CFTC alleged that Binance ignored US laws while cultivating an American customer base because it was profitable for them to do so. The CFTC asserted: “Binance has never registered with the CFTC in any capacity and has ignored federal laws essential to the integrity and vitality of the U.S. financial markets. » Binance circumvented US controls to prevent money laundering and terrorist financing, according to the CFTC. Part of Tuesday’s settlement is expected to go toward paying penalties related to the CFTC’s lawsuit.

However, a lawsuit against Binance is still on the table from the SEC. In June, the SEC alleged that Binance conducted a illegal cryptocurrency exchange citing Defendants’ “blatant disregard for federal securities laws.” The SEC said Binance took billions of US dollars “while exposing investors’ assets to significant risk.” The charges included operating unregistered exchanges, offering unregistered securities and misrepresenting trading controls on US platform Binance. This trial is still ongoing according to the Wall Street Journal.

Zhao appeared in federal court in Seattle on Tuesday to plead his case.

According to Bloomberg courtroom report:

Zhao faces a maximum sentence of 10 years and fines of up to $500,000, plus any profits he made from the alleged scheme. His lawyers told the court on Tuesday that his sentencing would be delayed by 6 months. Zhao’s deal includes a waiver of his right to appeal, provided his sentence does not exceed 18 months, according to Judge Brian Tsuchida during the plea hearing.