Cryptocurrency Giant Binance Faces Historic more then $4 Billion Penalty, CZ Resigns
The CZ CEO of Binance, which is the world’s largest cryptocurrency exchange, will step down. This decision comes after the company admitted on Tuesday to breaking the law, including the Bank Secrecy Act, which is a rule against money laundering.
Binance has to pay more than $4.3 billion to settle these charges, and this is the biggest penalty the Treasury Department has ever imposed. The U.S. Treasury Secretary, Janet Yellen, stated that Binance consistently and seriously violated U.S. laws against money laundering and sanctions.
Changpeng Zhao, the CEO, also admitted to not having an effective system to prevent money laundering and will resign from his role. He agreed to a $50 million fine as part of the settlement.
In a post, CZ confirmed he’s leaving as CEO, acknowledged his mistakes, and said Richard Teng, Binance’s head of regional markets, will take over as CEO. Zhao will still be a shareholder and can advise the company. He emphasized that there were no allegations about misusing customer funds or manipulating the market.
As part of the settlement, Binance agreed to be monitored by a third party overseen by the Treasury’s Financial Crimes Enforcement Network. This is to make sure Binance follows federal regulations.
Binance, in a blog post, took responsibility for its mistakes, expressed optimism about the future, and said it’s committed to complying with regulations. The company stated that it believes it will become stronger in the next 50 years.
The charges against Binance involve not reporting over 100,000 suspicious transactions from sanctioned groups, including terrorist organizations. The company also didn’t report transactions with websites selling materials related to child abuse.
Despite creating a separate company for U.S. customers, Binance allowed some U.S. customers to use the less regulated platform. This settlement is part of a tough time for the cryptocurrency world, marked by the collapse of major exchanges. The price of Bitcoin, however, has risen.
The guilty pleas by Binance’s CEO come shortly after his rival, Sam Bankman-Fried, was found guilty of fraud. The government is increasingly cracking down on cryptocurrency-related crimes, as highlighted by recent enforcement actions against Binance and another exchange, Kraken. Attorney General Merrick B. Garland emphasized that using new technology to break the law doesn’t make you a disruptor but a criminal.
