Binance CEO Changpeng Zhao Pleads Guilty to Securities Law Violations
Binance is set to pay more than $4.3 billion to settle charges with the Treasury Department.
- Binance CEO Changpeng Zhao pleaded guilty to several securities law violations for approximately four years.
- Zhao has stepped down as CEO, and under the plea deal, the company will pay over $4.3 billion in penalties.
Prosecutors reached a settlement in a major case in the U.S. government’s crackdown against the world’s leading cryptocurrency exchange. Changpeng Zhao, CEO of Binance, pleaded guilty to numerous violations of securities laws and the Bank Secrecy Act. He stepped down from his post soon after.
According to prosecutors, the violations allowed for several illegal and terrorist activities to take place through the cryptocurrency exchange, which had tried to evade federal laws for approximately four years. Binance faced criminal charges of violating the International Emergency Economic Powers Act, along with conspiracy and running an unlicenced money-transmission business.
As per the terms of the plea agreement, Binance will have to pay penalties and forfeitures worth $4.3 billion to the Treasury Department. It is one of the largest penalties that regulators have obtained. The key allegation against Zhao and others in the organization was the failure to set up effective measures against money laundering.
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The news has resulted in a further $1 billion in outflows, except for Bitcoin, with a liquidity drop of 25%. BNB, the native token of Binance itself, has seen a steep slide of 8%. Despite this, the platform remains the largest cryptocurrency exchange, accounting for $65 billion in value.
Binance is expected to continue its operations but under new rules. The company is expected to run on a new compliance program to keep up with the anti-money-laundering regulations of the U.S. Other competitor exchanges, including Coinbase and Kraken, are going through similar lawsuits set by the SEC. Other exchanges might look to leverage the blow against Binance in the near future.
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