Zhao's resignation and $4.3 billion settlement: What you need to know about the trouble at Binance
Changpeng Zhao (CZ), CEO of Binance is required to personally pay $50 million as part of the settlement. (Photo Credits: Getty Images)
Binance, the largest global cryptocurrency exchange, encountered a significant setback from the US government.
The company's CEO, Changpeng Zhao (CZ), admitted to not preventing money laundering, according to AP.
What
- Changpeng Zhao (CZ), CEO of Binance, resigned and pleaded guilty for breaching US anti-money laundering laws on Tuesday.
- This marks part of a $4.3 billion settlement, concluding a comprehensive investigation into the world's leading cryptocurrency exchange.
- CZ is required to personally pay $50 million as part of the settlement, according to Reuters.
This development follows a string of legal challenges in the cryptocurrency industry.
Notably, FTX founder Sam Bankman-Fried recently faced a fraud conviction.
Legal experts view the outcome favorably for Zhao, enabling him to retain his substantial wealth and stake in Binance.
Details
- Binance violated US laws by failing to adhere to regulations against money laundering and sanctions.
- The company did not report over 100,000 suspicious transactions involving groups such as Hamas and al Qaeda, recognised as terrorist organisations.
- Binance also omitted reporting transactions related to child sexual abuse materials and received significant funds from ransomware attacks.
The Justice Department, in conjunction with other agencies, reached a settlement with Binance.
Founder Changpeng Zhao admitted guilt and may face an 18-month prison term.
As per Reuters, the company is set to pay $1.81 billion within 15 months and an additional $2.51 billion as part of the deal.
"After today, I have resigned as CEO of Binance," Zhao announced on social media after the settlement was revealed. "Undoubtedly, it was emotionally challenging to let go. Yet, it is the right course of action. I have made errors and must take accountability. This decision is beneficial for our community, Binance, and myself."
Today, I stepped down as CEO of Binance. Admittedly, it was not easy to let go emotionally. But I know it is the right thing to do. I made mistakes, and I must take responsibility. This is best for our community, for Binance, and for myself.
— CZ 🔶 Binance (@cz_binance) November 21, 2023
Binance is no longer a baby. It is…
Binance's billionaire founder, Changpeng Zhao (CZ), originally from China and relocated to Canada at age 12, will be succeeded by Richard Teng, a long-time Binance executive.
It is an honour and with the deepest humility that I step into the role of Binance’s new CEO.
— Richard Teng (@_RichardTeng) November 21, 2023
We operate the world's largest cryptocurrency exchange by volume. The trust placed on us by our 150m users and thousands of employees is a responsibility that I take seriously and hold…
The company mentioned that the resolutions acknowledge Binance's responsibility for past compliance breaches, allowing the company to move forward.
Regarding the financial penalty imposed on Binance, legal experts suggest that while it's a substantial amount, the company could manage it.
Despite serious violations, Zhao, retaining his stake in Binance, may continue to exert influence, even with new leadership.
Zhao's estimated worth stands at $10.2 billion, and despite the grave violations, he appears to have fared relatively well, retaining ownership in a company that has resolved significant legal issues.
The settlement is viewed as a means for Binance to continue its operations while addressing legal challenges.