Binance’s Zhao Pleads Guilty and Steps Down in Settlement of US Illicit Finance Investigation

New York, November 21 (Reuters) – In a shocking new development, Changpeng Zhao, the chief of Binance, the world’s largest crypto exchange, has chosen to step down and has pleaded guilty to breaking U.S. anti-money laundering laws. This plea is part of a massive $4.3 billion settlement to resolve a long-standing probe into Binance and its activities, according to prosecutors on Tuesday.

This high-stakes deal aims to hold Zhao accountable for these legal transgressions, with the prosecutor’s announcement stating that he will personally pay $50 million, setting a new record for corporate penalties in the U.S. It also is the backdrop to another recent fraud conviction of FTX founder Sam Bankman-Fried, highlighting the wider turmoil faced by the crypto exchange industry.

Despite the significant penalties associated with Zhao’s plea, legal experts maintain that it is a favorable outcome for him, leaving his immense wealth intact and allowing him to retain his stake in Binance. The charges brought against Binance includes its failure to report over 100,000 suspicious transactions with several organizations labeled as terrorist groups by the U.S. government and dealing with websites promoting child sexual abuse materials.

“Binance made it easy for criminals to move their stolen funds and illicit proceeds,” U.S. Attorney General Merrick Garland stated. “Binance also did more than just fail to comply with federal law. It pretended to comply.” Some of the criminal and civil allegations against Binance align with Reuters’ previous investigative reports from 2022.

Binance’s former chief compliance officer Samuel Lim was also implicated, and the Commodity Futures Trading Commission (CFTC), and the Treasury Department were involved in the terms of this settlement. Zhao, a billionaire born in China, moved to Canada at the age of 12 and pleaded guilty in a Seattle court on Tuesday afternoon.

“Today, I stepped down as CEO of Binance,” Zhao said on social media. “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.”

While it remains uncertain what this settlement signifies for the future of Binance, Zhao’s departure stands as a significant development impacting the powerful figure within the crypto industry, along with the future of Binance. Richard Teng, a long-standing Binance executive, will take over at Binance as per Zhao’s statement, aiming to reassure users of the company’s financial strength, security, and safety. Reporting by Chris Prentice and Jonathan Stempel in New York and David Lawder in Washington; Additional reporting by Tom Wilson and Elizabeth Howcroft in London and Luc Cohen in New York; Editing by Michelle Price, Megan Davies and Lisa Shumaker

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