Binance, the world’s largest crypto exchange by volume, is about to see major changes as the US Department of Justice investigation reaches its conclusion. After long proceedings, the exchange has agreed to pay a massive $4.3 billion fine in order to reach a settlement with the DoJ.
Meanwhile, the exchange’s founder and CEO, Changpeng Zhao (CZ) has decided to step down from his position of chief executive, pleading guilty to AML requirements violation.
Binance and its executives punished for regulatory violations
The settlement that Binance has reached with the US authorities does not only include the Department of Justice but also the CFTC and the Treasury Department. However, it will finally resolve allegations that the world’s leading crypto exchange failed to maintain an adequate anti-money laundering program.
Binance was also accused of operating an unlicensed money-transmitting business and that it violated sanctions law, and the court found it guilty on all of these charges.
According to the settlement, Binance will forfeit $2.5 billion to the US government in addition to paying a fine of $1.8 billion, bringing the total to $4.3bn.
Furthermore, the exchange’s CEO, Changpeng Zhao, pleaded guilty to violating the Bank Secrecy Act. In doing so, he caused the exchange to violate the same act. Because of this, Zhao will also have to pay a $50 million fine and abandon his position as CEO. Not only that, but he will not be allowed to be involved in running his own exchange from this point forward.
Zhao is also not the only executive to be charged as part of the settlement. The exchange’s former chief compliance officer, Samuel Lim, was also charged. Attorney General Merrick Garland commented on the resolution of the lengthy case, stating that Binance became the largest crypto exchange in the world partially because of the crimes it and its executives committed.
Now, as a consequence, will have to pay one of the largest corporate penalties in US history, he added.
US regulators cracked down on Binance
Binance was founded during the crypto bull run of 2017, and it quickly rose to the top of the crypto world. However, it has also been on the DoJ’s radar for several years due to numerous inconsistencies, like the fact that it was offering products that it did not have a license for around the world, which has also been the reason why it was forced to withdraw from multiple countries.
Over the last few years, the exchange has done a lot to try and become regulatory compliant in different jurisdictions, but the crimes of the past finally caught up to it.
Earlier this year, in March, the CFTC also filed civil charges against it, claiming that the company had failed in its duty to perform identity verification checks and that it failed to implement proper compliance controls that would prevent money laundering.
In addition to CFTC, another major US regulator, the Securities and Exchange Commission, also filed a lawsuit against the exchange, accusing it of hosting unregistered securities, which is a clear violation of the securities law. As the SEC had put it, Binance was engaging in an extensive web of deception.