Binance Holdings Ltd, the entity that operates the world’s largest cryptocurrency exchange, Binance.com, pleaded guilty on Tuesday and has agreed to pay over $4 billion to resolve the Justice Department’s investigation into violations related to the Bank Secrecy Act (BSA), failure to register as a money transmitting business, and the International Emergency Economic Powers Act (IEEPA).
Binance’s Founder and Chief Executive Officer, Changpeng Zhao, a Canadian national, also pleaded guilty to failing to maintain an effective anti-money laundering (AML) program, in violation of the BSA and has resigned as CEO of Binance, US Attorney’s Office, Western District of Washington said in a statement.
“Binance turned a blind eye to its legal obligations in the pursuit of profit. Its willful failures allowed money to flow to terrorists, cybercriminals, and child abusers through its platform,” said Secretary of the Treasury Janet L. Yellen. “Today’s historic penalties and monitorship to ensure compliance with U.S. law and regulations mark a milestone for the virtual currency industry. Any institution, wherever located, that wants to reap the benefits of the U.S. financial system must also play by the rules that keep us all safe from terrorists, foreign adversaries, and crime or face the consequences.”
According to court documents, Binance admitted to prioritizing growth and profits over compliance with US law.
Binance was said to have failed to implement controls and procedures to prevent money laundering.
Binance also did not implement controls that would have prevented U.S. customers from conducting transactions with customers in sanctioned jurisdictions, despite knowing that the system it used to match customers for transactions would necessarily cause transactions in violation of IEEPA.
“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,” he wrote on his social media account on X. “Binance is no longer a baby. It is time for me to let it walk and run. I know Binance will continue to grow and excel with the deep bench it has.”
He said Teng is a “highly qualified leader and, with over three decades of financial services and regulatory experience, he will navigate the company through its next period of growth”. He will ensure Binance delivers on our next phase of security, transparency, compliance, and growth.
Prior to joining Binance, Teng was CEO of the Financial Services Regulatory Authority at Abu Dhabi Global Market (ADGM); Chief Regulatory Officer of the Singapore Exchange (SGX); and Director of Corporate Finance in the Monetary Authority of Singapore, Zhao wrote.
1) reassuring users that they can remain confident in the financial strength, security and safety of the company
2) collaborating with regulators to uphold high standards globally that foster innovation while providing important consumer protections
3) working with partners to drive growth and adoption of Web3
“It is an honour and with the deepest humility that I step into the role of Binance’s new CEO. We operate the world’s largest cryptocurrency exchange by volume. The trust placed on us by our 150 million users and thousands of employees is a responsibility that I take seriously and hold dear,” he said.
According to AFP‘s report, Binance was founded in China and Zhao moved its operations to other locations internationally after a crackdown on the crypto sector by Beijing.
The volatile industry surged in 2021 with a range of complex products and celebrity endorsements propelling it to a valuation in excess of $3 trillion last year. A series of scandals, including the collapse of the FTX exchange and criminal charges for its executives, saw public confidence evaporate and investors pull their money out, the report added.
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