It looks like November hasn’t been such a great month for anyone who ran a large, global cryptocurrency exchange.
Changpeng Zhao, better known to the cryptocurrency industry as “CZ,” is stepping down as the CEO of Binance, the largest crypto exchange in the world. Along with leaving Binance, CZ will also plead guilty to federal money laundering charges.
The information was made public on Tuesday via court documents first reported on by the Wall Street Journal.
“The Justice Department has secured felony guilty pleas from the world’s largest cryptocurrency exchange Binance and from its founder and CEO Changpeng Zhao, also known as CZ,” said Attorney General Merrick Garland in a statement.
According to federal prosecutors, Binance failed to stop money laundering on the crypto exchange. Failure to set up programs to deal with such activity is a violation of the Bank Secrecy Act. Binance also violated U.S. economic sanctions, according to the documents. The DOJ says that Binance did so “in a deliberate and calculated effort to profit from the U.S. market without implementing controls required by U.S. law.” Prosecutors allege that CZ actively tried to skirt U.S. laws and knew that Binance was not compliant.
In addition to all of this, as part of the agreed-upon settlement, Binance will pay a whopping $4.3 billion fine. CZ himself will also pay a $50 million fine.
“Today, I stepped down as CEO of Binance,” CZ said in a statement posted on X. “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. Binance is no longer a baby. It is time for me to let it walk and run.”
CZ then announced that Binance’s Global Head of Regional Markets, Richard Teng, would take over the CEO position.
Earlier this year, Bloomberg reported that Binance was the subject of a U.S. Department of Justice probe regarding its role in money laundering between U.S.–sanctioned countries, like Russia.
These actions taken by the U.S. against Binance come as regulators crack down on bad actors within the cryptocurrency industry as a whole. On Monday, the SEC sued crypto exchange Kraken, alleging that the company is illegally acting as an unregistered securities exchange. And, of course, earlier this month, FTX founder and former CEO Sam Bankman-Fried was found guilty of multiple fraud charges for improperly using customers’ funds, which ended up tanking the exchange.
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Binance will pay a $4.3 billion fine and its CEO, Changpeng Zhao, will leave the company as part of a settlement with the DOJ.
