Updated Nov 21, 2023 - Business

Binance CEO "CZ" steps down, pleads guilty to U.S. money laundering violations

Changpeng Zhao looking toward and the left of the camera, speaking to an audience it a small microphone extending from his ear.

Binance founder and CEO Changpeng "CZ" Zhao. Photo: Horacio Villalobos Corbis/Getty Images

Changpeng "CZ" Zhao, founder and CEO crypto exchange Binance, agreed to step down and plead guilty as part of a $4.3 billion settlement agreement involving U.S. criminal and civil charges against him and his company.

Why it matters: Binance is the world's largest crypto exchange, and CZ the most powerful player in the industry — even before SBF.

Driving the news: CZ agreed to plead guilty in a Seattle federal court to money laundering violations.

  • The settled complaint alleges that CZ and Binance prioritized "growth over compliance," facilitating billions of dollars of crypto transactions on behalf of customers without appropriate Know-Your-Customer (KYC) procedures.

What they're saying: "Binance turned a blind eye to its legal obligations in the pursuit of profit," Treasury Secretary Janet Yellen said Tuesday in a joint press conference with the DOJ announcing the settlement.

  • "Its willful failures allowed money to flow to terrorists, cybercriminals, and child abusers through its platform," she said.
  • U.S. Attorney General Merrick Garland said the DoJ's felony complaint and the various civil enforcement actions against the company "represents the whole of government approach to combat corporate crime."

Details: CZ agreed to pay $50 million in fines that will be credited to the CFTC, related to the resolution of that suit.

  • He is also prohibited from operating or managing the business for 3 years.
  • Binance will also plead guilty to a criminal charge related to knowingly violating the Bank Secrecy Act, and will pay more than $4.3 billion as part of the settlement agreement — including the largest penalty in U.S. Treasury history.

The other side: "These 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," Binance said in a statement.

  • "We are confident that Binance will emerge as a stronger company as we lay the foundation for the next 50 years."

Of note: The company named Richard Teng, its now-former Global Head of Regional Markets, as its new CEO, effective immediately.

Details: The deal puts an end to a years-long investigation into Binance, which in recent months has laid off employees and seen a rash of executive departures.

Between the lines: Binance will pay a $3.4 billion civil monetary penalty to FinCEN, the financial crimes bureau within the Treasury department. That agreement comes with a 5-year monitorship and various agreements to bone up compliance and ensure the company's complete exit from the U.S.

  • It will also pay a $968 million fine to OFAC, the Office of Foreign Assets Control.

The intrigue: The SEC's prior suit against Binance still stands.

Editor's note: This article has been updated with new details throughout.

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