Changpeng Zhao, the founder and CEO of Binance, resigned from his position and pleaded guilty to violating US anti-money laundering laws. This move comes as part of a historic $4.3 billion settlement to resolve a long-running investigation into Binance, the world’s largest crypto exchange.
The settlement, one of the largest corporate penalties in US history, includes a personal payment of $50 million from Zhao. Prosecutors detailed Binance’s breach of US anti-money laundering and sanctions laws, revealing the failure to report over 100,000 suspicious transactions involving organizations categorized by the US as terrorist groups, including Hamas, al Qaeda, and the Islamic State of Iraq and Syria.
The fallout from the settlement marks another significant blow to the cryptocurrency industry, which has faced increasing scrutiny and investigations.
Who is Changpeng Zhao?
Changpeng Zhao, commonly known as CZ, is a Chinese-Canadian business executive and the founder of Binance, one of the world’s largest cryptocurrency exchanges. Zhao started his career in the financial industry, working at various companies including Bloomberg Tradebook, Fusion Systems, and others. He became involved in the cryptocurrency space in 2013, working on various projects related to blockchain and cryptocurrency.
In July 2017, Changpeng Zhao founded Binance, a cryptocurrency exchange that quickly gained popularity for its user-friendly interface, a wide range of supported cryptocurrencies, and low trading fees.
Binance quickly became one of the largest and most influential cryptocurrency exchanges globally, attracting a large user base due to its innovative features and aggressive expansion strategies. Under Zhao’s leadership, Binance introduced its native cryptocurrency, Binance Coin (BNB), which became a significant player in the cryptocurrency market.
Despite Binance’s success, the platform has faced regulatory challenges in various countries, prompting Zhao to adapt the business to comply with different jurisdictions’ requirements.
“Binance made it easy for criminals to move their stolen funds and illicit proceeds on its exchanges,” U.S. Attorney General Merrick Garland said on Tuesday. “Binance also did more than just fail to comply with federal law. It pretended to comply.”
What’s next for Zhao?
The Justice Department, which negotiated the settlement with the Commodity Futures Trading Commission (CFTC) and the Treasury Department, is seeking an 18-month prison sentence for Zhao, the maximum suggested under federal guidelines, the New York Times reported.
Vanderbilt University law professor Yesha Yadav said while the fine was extremely large it appeared manageable for Binance, reported Reuters.
Zhao is worth $10.2 billion, according to Forbes.
“He still has enormous wealth,” said Robert Frenchman of Mukasey Frenchman LLP. “He isn’t likely to spend too much time in a U.S. jail. He retains his ownership stake in Binance, a company that has now resolved some of its biggest legal issues.”
(With inputs from agencies)
Omprakash Tiwary is a business writer who delves into the intricacies of the corporate world. With a focus on finance and economic landscape. He offers readers valuable insights into market trends, entrepreneurship, and economic developments.
