Binance Acknowledges Wrongdoings, Resolves with Unprecedented $4.3 Billion Fine in US Crackdown
Binance Holdings Ltd., the largest cryptocurrency exchange in the world, has made a groundbreaking move by reaching a historic plea deal with the United States Department of Justice, resulting in a penalty of $4.3 billion. This development comes as Binance acknowledges its involvement in various violations under the leadership of former CEO Changpeng Zhao.
The plea deal, which was first revealed in November, brings an end to a lengthy investigation that uncovered Binance’s failure to report over 100,000 suspicious transactions. Shockingly, these transactions included dealings with designated terrorist groups such as Hamas, al Qaeda, and ISIS. Furthermore, Binance was found to have supported the sale of child sexual abuse materials and had received ransomware proceeds.
Prosecutors revealed that Binance lacked crucial components 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 use Binance for transactions involving mixing services and fund transfers.
In a statement made in court, Binance’s Deputy General Counsel, Josh Eaton, took full responsibility for the company’s past actions and expressed their dedication to improving their compliance with KYC and anti-money laundering regulations. He emphasized their commitment to 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 requirement for three years of compliance monitoring by an independent firm, as well as the enhancement of Binance’s anti-money laundering and sanctions compliance programs.
Former CEO Changpeng Zhao, also known as CZ, will face a sentencing hearing on April 30 after pleading guilty to violating the Bank Secrecy Act and resigning from his position in November. He could potentially face up to 18 months in prison, although U.S. prosecutors may push for a longer sentence of up to 10 years.
Richard Teng, Binance’s former Global Head of Regional Markets, has taken over as CEO following Zhao’s resignation.
Binance’s settlement represents a significant moment for the company as it demonstrates their commitment to addressing past issues and rebuilding trust in the cryptocurrency industry. The exchange has also reached separate agreements with the CFTC, FinCEN, and OFAC, with approximately $1.8 billion being credited towards those resolutions.