Changpeng Zhao (CZ), the CEO of Binance, the world’s largest crypto exchange, is set to plead guilty to criminal charges of violating U.S. anti-money laundering laws. This decision is part of a settlement that could ensure the continued operation of the company. CZ is scheduled to appear in a Seattle federal court this Tuesday afternoon to enter his plea, WSJ reports. CZ will maintain his majority ownership of Binance but will step down from any executive role.
Binance itself will also plead guilty to a criminal charge and is set to pay fines totaling $4.3 billion. Allegedly, this amount includes settlements for civil allegations raised by various regulators.
This plea deal marks the conclusion of prolonged investigations into Binance, a company founded by CZ in 2017 that rapidly became a central player in the global crypto market. The criminal probe has loomed over Binance, especially as the company faced increasing competition and challenges, including the collapse of FTX, a key offshore rival, last year.
The DOJ has declined to comment on the proceedings. Notably, the settlement to be announced does not include an agreement with the U.S. Securities and Exchange Commission (SEC), which in June sued Binance and CZ for allegedly violating U.S. investor protection laws. Major crypto exchanges like Binance have opted to contest the SEC’s stance, arguing that cryptocurrencies do not fall under the regulatory scope of the SEC.
The DOJ’s investigation into Binance scrutinized the exchange’s anti-money laundering measures and its dealings with individuals in sanctioned countries, such as Iran and Russia, potentially enabling trade with American users.
Additionally, a separate agreement is expected to resolve a civil lawsuit filed by the U.S. Commodity Futures Trading Commission (CFTC) against Binance and CZ. The CFTC has accused Binance of failing to implement adequate measures against terrorist financing and money laundering and of providing U.S. customers access to derivatives trading on unregulated platforms. The $4.3 billion fine includes settlements for these allegations and those made by other Treasury Department agencies.
CZ, currently residing in the United Arab Emirates, a nation without a mutual extradition treaty with the U.S., had limited his travel this year.
The SEC and US authorities have been relentlessly targeting CZ and Binance over the past few years. What concerns me is the fact that the US authorities did not use the same extremely aggressive approach, tactics and investigation against FTX and Sam Bankman-Fried (until too late) and even after SBF violated his release conditions. Why such difference in treatment? Maybe the fact that Sam Bankman-Fried has US government connections with Gensler through his parents (MIT) and girlfriend Caroline Ellison? The American justice system so far has treated Sam Bankman-Fried and FTX more favorably than CZ & Binance. But this won’t destroy Binance and won’t eliminate their dominant market position – something US authorities have been trying very hard to accomplish. Therefore, CZ used a smart tactic and listened to his lawyers and decided to plead guilty, pay the US fines and preserve Binance as a strong, viable business player in the crypto market. Very smart move and finally new chapter will open in the crypto universe. With the US authorities not pursuing any legal actions against the exchange, it will facilitate Binance’s further growth and help the overall crypto mass adoption. The future is bright and there is tons of new development and progress within the blockchain tech. The next bull run 2025-2026 (assuming all else equal and no more scandals or USDT liquidity issues), with take these hard facts into consideration and it will be the stepping stone for the Wall Street institutions to enter the crypto space via Bitcoin ETFs. Ethereum ETFs, etc. ETFs are coming and that’s why the US and Binance had to settle this fight. It’s great news for the crypto world! With EU’s MiCA Act in action, the US looks like set to develop (in near future) a standard-universal legal framework for the crypto, where all government agencies will be in agreement whether a crypto coin is a utility or a security…