Cryptocurrency exchange Binance pleads guilty along with CEO to money laundering charges

5 views 11:43 pm 0 Comments November 21, 2023

Binance, the operator of the world’s largest cryptocurrency exchange, pleaded guilty Tuesday to multiple financial crimes and agreed to pay about $4.3 billion, the Justice Department announced.

According to the department, The company, its CEO, and its founder, Canadian national Changpeng Zhao, agreed they broke the law by failing to maintain an effective anti-money laundering program. Binance also pleaded guilty to failing to register as a money-transmitting business and violating the International Emergency Economic Powers Act. Zhao, who also goes by “CZ,” has resigned as CEO.

The developments come just weeks after the department secured a conviction against Sam Bankman-Fried, the founder of cryptocurrency exchange FTX, for committing fraud through a scheme that cheated customers and investors of at least $10 billion.

In a Tuesday statement, Binance said the resolutions “acknowledge our company’s responsibility for historical, criminal compliance violations, and allow our company to turn the page on a challenging yet transformative chapter of learning and growth.” It announced its former Global Head of Regional Markets, Richard Teng, was replacing Zhao as CEO.

The legal action against Binance centered on the company’s inability to establish a sufficient program to prevent its platform from being exploited for money laundering purposes. The Justice Department alleged that the company tried to keep “VIP” U.S. customers even after announcing in 2019 that it would block them, including by helping them register offshore entity accounts and encouraging them to provide information that suggested they were outside the U.S.

“Binance prioritized its profits over the safety of the American people,” said Attorney General Merrick Garland in a Tuesday press conference announcing the guilty pleas.

“The message here should be clear,” Garland said. “Using new technology to break the law does not make you a disrupter; it makes you a criminal.”

Officials raise alarms about terrorism funding links

Binance will be subject to monitoring and reporting requirements in the future, and the company is also required by law to file suspicious activity reports that Garland said will assist with investigations into malicious cyber activity and terrorism funding, including support groups like Hamas.

Treasury Department Secretary Janet Yellen also spoke at the press conference about concerns that cryptocurrency platforms are being used to facilitate terrorism activities, illegal narcotics, and child sexual abuse. She said Binance processed transactions tied to Al-Qaeda and ISIS but never reported suspicious activity.

“If virtual currency exchanges and financial technology firms wish to realize the tremendous benefits of being part of the US financial system and serving U.S. customers, they must play by the rules,” Yellen said.

The company will have to pay about $4.3 billion as a combination of a fine and having to forfeit money.

“This is one of the largest penalties we have ever obtained from a corporate defendant in a criminal matter,” Garland said.