Binance Accepts $4.3 Billion Plea Deal, Acknowledges Previous Violations: What Lies Ahead for CZ?
Binance, the largest cryptocurrency exchange in the world, has received approval from a judge for a groundbreaking $4.3 billion plea deal with the United States Department of Justice. This significant settlement comes as Binance takes responsibility for past violations and actions under the leadership of former CEO Changpeng Zhao, also known as CZ.
The plea deal, which was initially announced in November, concludes a lengthy investigation that uncovered Binance’s failure to report over 100,000 suspicious transactions, including those involving designated terrorist groups like Hamas, al Qaeda, and ISIS. Furthermore, Binance was found to have supported the sale of child sexual abuse materials and was among the top recipients of ransomware proceeds.
Prosecutors revealed that Binance lacked crucial elements of an anti-money laundering program, such as know-your-customer (KYC) requirements, and failed to file suspicious activity reports. This allowed illicit actors to exploit Binance for transactions involving mixing services and fund transfers.
In a statement made in court, Binance’s Deputy General Counsel, Josh Eaton, expressed the cryptocurrency exchange’s acceptance of full responsibility for its past actions. Eaton emphasized Binance’s commitment to improving its KYC and anti-money laundering compliance, with the aim of setting industry standards for compliance, security, and transparency.
As part of the plea agreement, Binance will forfeit $2.5 billion and pay a criminal fine of $1.8 billion, resulting in a record financial penalty of $4.3 billion. The agreement also includes a three-year compliance monitoring requirement by an independent firm, which is yet to be appointed. Binance is also obligated to enhance its anti-money laundering and sanctions compliance programs.
Binance has separately reached agreements with the Commodity Futures Trading Commission (CFTC), the Financial Crimes Enforcement Network (FinCEN), and the Office of Foreign Assets Control (OFAC), with approximately $1.8 billion being credited towards those resolutions.
Changpeng Zhao, popularly known as CZ, is awaiting a sentencing hearing scheduled for April 30. Having pleaded guilty to violating the Bank Secrecy Act and resigning from his position as Binance CEO in November, Zhao faces a potential prison term of up to 18 months under federal guidelines. However, U.S. prosecutors may argue for a longer sentence, up to 10 years. Richard Teng, Binance’s former Global Head of Regional Markets, assumed the role of CEO in November following Zhao’s resignation.
The settlement reached by Binance signifies a turning point, as the company strives to address past issues and rebuild trust in the cryptocurrency industry.