Binance’s once-famous CEO Changpeng Zhao (CZ) has stepped down from the reins as U.S. authorities bring a multi-year investigation into the business to a climax.
It’s the end of an era. Binance’s enigmatic CEO Changpeng Zhao announced Tuesday that he has stepped down from the role. The company has replaced Zhao with Former Global Head of Regional Markets, Richard Teng.
However, the leadership change in Binance is more than just a switch of corporate roles. Rather, it marks the closing stages of what has been a multi-year investigation into its operations by U.S. authorities.
As announced by the U.S. Department of Justice (DoJ) on Tuesday, Binance and CZ pleaded guilty to charges of facilitating money laundering, sanctions violations, and unlicensed money transmission. The total settlement for the offense is northward of $4 billion, with several reports putting the total sum at $4.3 billion.
The significant settlement sum will be split between the U.S. Financial Crimes Enforcement Network (FinCEN), the Commodity Futures Trading Commission (CFTC), and the Office of Foreign Assets Control (OFAC). These agencies are all parties to the lawsuit against Binance, having judged that the company had at one time or the other violated financial laws that fall under their purview.
Among other things, the CFTC alleged that Binance operated its exchange without acquiring the requisite licenses. FinCEN and OFAC, on their part, claim that Binance implemented loose anti-money laundering and know-your-customer (KYC/AML) measures, allowing the platform to serve as a hub for terrorist financing and bad actors.
The offenses were notably carried out during Binance’s formative years (2017-2019), with popular terrorist groups such as Hamas funding their operations using accounts on the exchange.
Binance and CZ Pleads Guilty, CEO Released on Bail
Binance and its CEO have pleaded guilty to the allegations, with eyes firmly set on turning the page on what is described as a “challenging […] chapter of learning and growth” for the business.
In its official statement announcing the resolution, Binance admitted to having loose compliance policies in its early years. However, the exchange also reassured users that it has since beefed up compliance with significant hires and implementation of several industry-leading measures.
Additionally, the allegations raised against Binance do not include that it misappropriated user funds or committed any market manipulation. Instead, they are mainly compliance-related and have served as a learning curve for the company going forward.
Meanwhile, Binance’s now former CEO, who was formerly arrested by U.S. authorities as part of the plea deal, has been released on a $175 million bail bond. The release allows Changpeng Zhao to enjoy relative freedom until he reappears in a U.S. court for sentencing on February 23, 2024. The former Binance CEO would be allowed to return to the UAE and come back to the U.S. 14 days before his sentencing.
CZ would have originally faced up to 10 years in prison, but that sentence was cut to 18 months as part of the plea agreement. He also paid a $50 million fine, while the judge in the case may also decline sentencing based on jail time and instead impose additional fines.
BNB Drops 9% Amid Uncertain Future
The plea agreement between Binance and the U.S. government allows the company to continue operating. Yet, with government officials keeping a close eye on its operations, it is uncertain whether Binance native BNB coin will continue to play a crucial role in the ecosystem.
Traders and investors have speculated on this development, causing the price of BNB to drop 9% in the hours following news of the Binance settlement. After reaching a high of around $272, BNB dropped as low as $224 and traded at $234 at the time of writing.
In the meantime, the asset remains the fourth largest crypto by market capitalization, valued at $35 billion.
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