US authorities say CEO Changpeng Zhao pleaded guilty to breaking anti-money laundering laws.
Published On 21 Nov 202321 Nov 2023
Changpeng Zhao, founder of Binance, the world’s largest cryptocurrency exchange, has stepped down as CEO and pleaded guilty to violating anti-money laundering laws.
The deal with the United States Department of Justice (DoJ) is part of a larger settlement that involves several federal agencies and will include fees of more than $4bn, the DoJ said on Tuesday.
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The announcement is the latest blow to the cryptocurrency industry, which has been marred by a series of scandals and investigations that have unearthed fraudulent behaviour by central players and firms.
Cryptocurrency has also comes under scrutiny as a tool used by illicit groups to circumvent global financial safeguards.
Zhao, a Canadian national, pleaded guilty to one count of failure to maintain an effective anti-money laundering programme.
“Binance became the world’s largest cryptocurrency exchange in part because of the crimes it committed. Now it is paying one of the largest corporate penalties in US history,” Attorney General Merrick Garland said.
This month, Sam Bankman-Fried, the 31-year-old founder of FTX, the world’s second-largest crypto exchange, was convicted of fraud for stealing more than $10bn from customers and investors.
“In just the past month, the Justice Department has successfully prosecuted the CEOs of two of the world’s largest cryptocurrency exchanges in two separate criminal cases. The message here should be clear: Using new technology to break the law does not make you a disruptor. It makes you a criminal,” Garland said.
Acting US Attorney Tessa Gorman for the western district of Washington said that because Zhao “knowingly operated a financial platform without basic anti-money laundering safeguards, the company caused illegal transactions between US users and users in sanctioned jurisdictions such as Iran, Cuba, Syria, and Russian-occupied regions of Ukraine – transactions for which Binance profited with significant fees”.
Prosecutors have said that as part of the settlement, Binance will pay fees of $1.81bn, a forfeiture of $2.5bn, and personal payments from Zhao of about $50m.
Zhao’s plea agreement also bars him from all involvement with Binance, a Cayman Islands limited liability company.
The founder has previously faced charges of diverting customer funds.
“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,” Treasury Secretary Janet Yellen said. “Any institution, wherever located, that wants to reap the benefits of the US financial system must also play by the rules that keep us all safe from terrorists, foreign adversaries and crime or face the consequences.”
Source
:
Al Jazeera and news agencies
FAQs
Zhao stepped down as Binance's chief in November, when he and the exchange he founded in 2017 admitted to evading money-laundering requirements under the Bank Secrecy Act.
What happened with Binance's founder? ›
Changpeng Zhao, the founder of the world's leading cryptocurrency exchange, was sentenced on Tuesday to four months in prison after pleading guilty last year to charges that he failed to maintain an effective anti-money laundering program.
Why did the CEO of Binance go to jail? ›
Binance founder Changpeng “CZ” Zhao has reported to a federal prison in California where he will spend the next four months for failing to implement an adequate know-your-customer (KYC) program at the world's largest cryptocurrency exchange.
What did Binance CEO do wrong? ›
Bankman-Fried and other crypto executives, Mr. Zhao pleaded guilty to only a single criminal count. He admitted that he had failed to establish an adequate anti-money-laundering system at Binance, resigned as the company's chief executive and agreed to a $50 million fine.
What is the sentencing for the founder of Binance? ›
Binance's billionaire founder Changpeng Zhao has reported to a low-security federal prison in Lompoc, California. Zhao was sentenced to four months in prison in April after pleading guilty to charges of enabling money laundering at his crypto exchange.
Is Binance a Chinese owner? ›
Binance was founded in 2017 by Changpeng Zhao, a developer who had previously created high-frequency trading software. Binance was initially based in China, then moved to Japan shortly before the Chinese government restricted cryptocurrency companies.
Who is the billionaire founder of crypto exchange Binance? ›
Changpeng Zhao, the billionaire co-founder and former CEO of Binance, is expected to see his mammoth wealth remain intact and likely continue to climb even as he faces time behind bars after his sentencing in a Seattle court.
Why is Binance controversial? ›
Binance, which has no designated global headquarters, has courted controversy worldwide. In November 2023, its founder and erstwhile chief executive Changpeng Zhao pled guilty to money laundering charges by the US Securities and Exchange Commission.
How rich is the owner of Binance? ›
Changpeng Zhao, known as "CZ," founded Binance, which rapidly grew to be the largest cryptocurrency exchange in the world by daily trading volume. With a net worth estimated at $39.6 billion as of March 2024, Zhao's story reflects the fast-paced and unpredictable world of cryptocurrency.
Who are the people behind Binance? ›
After pleading guilty to a money-laundering violation in November, Changpeng Zhao, the founder of the cryptocurrency exchange Binance, did not sit still. A federal judge denied his request to return home to Dubai, but Mr. Zhao, 47, was free to roam the United States.
Cryptocurrency exchange giant, Binance, facing charges for alleged $35.4million money laundering and tax evasion in Nigeria, has been fined about C$ 6 million ($4.38million) by Canada's anti-money laundering agency for violating the country's money laundering and terrorist financing laws.
Is Binance safe now? ›
Binance Wallet (Trust Wallet) is safe to store cryptocurrencies. Do not leave your funds on Binance Exchange. Download Binance Wallet which is called Trust Wallet and store your coins in this wallet. With Trust Wallet you can buy and sell cryptocurrencies which are available on Binance Dex.
Why was Binance banned in Nigeria? ›
Three days later, the EFCC filed five-count charges against Binance and the two executives, accusing them of engaging in business without valid licences, and using their virtual asset services platform to unlawfully negotiate forex rates in Nigeria, among others.
Why is Binance owner in jail? ›
Changpeng Zhao, the former CEO of Binance, has started a four-month prison sentence in Lompoc, California, for not preventing money laundering on the exchange. Zhao pleaded guilty and received a lighter sentence than prosecutors had sought. He also agreed to pay a $50 million fine.
Who is the father of Binance? ›
Who invented Bitcoin? ›
Satoshi Nakamoto created Bitcoin in 2009. The name "Satoshi Nakamoto" is the pseudonym for the person or people who introduced the concept of Bitcoin in a 2008 paper. 1 Nakamoto remained active in the creation of Bitcoin and the blockchain until about 2010 but has not been heard from since.
Why is CZ being jailed? ›
Changpeng Zhao reported to a prison in California on Tuesday to begin a four-month sentence for failing to properly safeguard the world's largest crypto exchange against money laundering.
What happened to CZ Peng? ›
Changpeng Zhao, also known as "CZ," has been one of the wealthiest people in crypto. His rivalry with Sam Bankman-Fried nearly saw Binance save FTX from bankruptcy. But Binance had its own issues: Zhao has pleaded guilty to anti-money laundering charges, and was sentenced to 4 months in prison.
How much did Binance CEO lose? ›
Binance Founder CZ Loses $12 Billion on Crypto-Trading Slump
That wiped $11.9 billion from the fortune of Binance's founder, Changpeng Zhao, known as CZ, dropping him to $17.2 billion. CZ, 46, played a role in the events that landed Bankman-Fried in federal court.
How much is Changpeng Zhao worth? ›
