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Binance founder and CEO Changpeng Zhao has agreed to plead guilty to money laundering violations and step down from the world’s largest crypto exchange in a sweeping deal with law enforcement and American financial regulators.
CZ, as it is widely known, will also pay a $50 million fine, while Binance will pay $4.3 billion in fines as part of the deal. The settlement will allow Binance to continue operating.
The announcement from the Justice Department, Treasury Department and Commodity Futures Trading Commission comes less than a month after federal prosecutors convinced a jury to convict CZ’s former rival, FTX founder Sam Bankman-Fried, guilty of seven criminal charges, including fraud and money laundering.
“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 US history,” said Attorney General Merrick B. Garland in a statement.
The DOJ said it plans to maintain its aggressive stance against crypto players.
“Over the past month, the Department of Justice has successfully prosecuted the CEOs of two of the world’s largest cryptocurrency exchanges in two separate criminal cases,” the attorney general said. “The message here should be clear: using new technology to break the law doesn’t make you a disruptor, it makes you a criminal.”
Regulators issue warning to other crypto players
The deal ends investigations by the DOJ and commodities regulator into Binance – although the company could still face heavy sanctions from the Securities and Exchange Commission.
Binance did not immediately respond to a request for comment.
“The outcome of these agreements will put an end to corporate behavior that has posed risks to the U.S. financial system, American citizens, and our nation’s national security for too long,” Treasury Secretary Janet Yellen said in a statement.
She also warned other crypto players that they must comply with US regulations.
“If virtual currency exchanges and fintech companies want to enjoy the enormous benefits of being part of the U.S. financial system and serving U.S. customers, they must play by the rules,” Yellen said. “And if they don’t, the U.S. government will take action.”
A major player in crypto
A one-stop shop for investors in cryptocurrencies and other digital assets, Binance is emblematic of the borderless nature of the new crypto-economy.
It has no official headquarters and CZ – who has become a well-known player in the crypto space – has spent much of his adult life moving from city to city, mainly in Asia and the Middle East. -East.
Last year, Binance saw its market share increase after the collapse of FTX. But in recent months, users have fled to other cryptocurrency exchanges as the SEC and other regulators scrutinize Binance’s activities.
The company has also seen top executives leave, while cutting thousands of jobs around the world.
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Although the settlement marks a major reprieve for Binance, the legal troubles are far from over.
The SEC, under the leadership of Gary Gensler, has aggressively targeted the cryptocurrency industry under existing regulations.
The SEC accused CZ and Binance of engaging in “a vast web of deception, conflicts of interest, lack of disclosure, and calculated evasion of the law” over their operations.
The charges include accusations that Binance and CZ failed to clearly separate their U.S. and international operations as required by current regulations, and allowed illicit activities such as money laundering on the crypto exchange.