Binance Holdings Limited, the world’s foremost cryptocurrency exchange, alongside its trailblazer and CEO, Changpeng Zhao, has submitted a guilty plea for contravening anti-money laundering measures in the US, according to a statement made by the US Attorney’s Office, Western District of Washington on Tuesday. The plea aims to bring an end to an inquiry by the Department of Justice into breaches of the International Emergency Economic Powers Act (IEEPA) and Bank Secrecy Act (BSA).
Binance has committed to paying a sum exceeding $4 billion to settle the probe. Zhao, in response to the admission of guilt, has stepped down from his position as CEO. Legal papers show that Zhao admitted to violating the BSA and failing to administer an effective anti-money laundering (AML) program.
Substantial efforts from the US Commodity Futures Trading Commission, the Office of Foreign Assets Control, and the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) led to one of the most significant corporate solutions which include criminal charges.
Established in 2017, Binance rapidly emerged as one of the biggest entities in the cryptocurrency sector, thanks to its numerous US-based clients. Binance was mandated to register with FinCEN to serve US clients as a money services venture. Additionally, having US clients meant that Binance was obligated to observe US laws that mandated the creation of a comprehensive AML program.
Accusations leveled against Binance indicate that it failed to establish robust AML controls, thus making it susceptible to money laundering activities. Treasury Secretary Janet L. Yellen stated that the company overlooked its legal duties and prioritized profits. Furthermore, she asserted that Binance and its deliberate omissions had facilitated the movement of funds towards terrorists, hackers, and child abuse criminals via its platform.
The Financial Repercussion Is Among the Heaviest for the Corporate Sector in the US
As per the terms of the plea agreement, Binance consented to relinquish approximately $2.51 billion. Court papers reveal that the cryptocurrency company has also agreed to remit a criminal penal sum of $1.81 billion, brining the total penalty to a breathtaking $4,316,126,163.
As part of the plea deal, Binance has committed to undergoing a three-year monitoring period by an independent body, in tandem with agreeing to upgrade its AML mechanisms. Thus, despite the financial impacts and intensive scrutiny, Binance will keep its operations running.
On a related note, Zhao, who is thought to have a net worth exceeding $23 billion, is also expected to face a hefty $200 million economic penalty. In addition to a $50 million fine, the previous leader of the largest cryptocurrency marketplace will have to map out $150 million as civil penalties.
“In recent times, we have successfully brought charges against the CEOs of two of the globe’s biggest cryptocurrency exchanges in two distinct criminal cases. The lesson here is unambiguous: flouting the law under the disguise of technological innovation does not make you a revolutionary, it makes you a lawbreaker.”
Merrick B. Garland, Attorney General
Attorney General Merrick B. Garland unveiled that Binance’s growth into the largest cryptocurrency exchange was partially spurred by its regulatory violations. He further noted that the organization is now burdened with one of the most substantial corporate penalties in US history.
Garland touched on the Justice Department’s recent triumphs in prosecuting CEOs of two leading cryptocurrency exchanges. In conclusion, he emphasized that such actions convey a clear signal: The Justice Department remains ready to tackle entities that exploit technology to defy the law.
