November 22, 2023 (MLN): Binance Holdings Ltd. and its Chief Executive Officer Changpeng Zhao pleaded guilty to anti-money laundering and US sanctions violations under a sweeping settlement with the US that allows the cryptocurrency exchange to continue operating, Bloomberg reported.

Binance will pay $4.3 billion in one of the largest corporate agreements in US history. Zhao will pay a $50 million fine under a deal that requires him to step down as CEO.

Changpeng Zhao pleaded guilty Tuesday to violating the Bank Secrecy Act in federal court in Seattle. The deal, which includes the Justice Department, Treasury Department, and the Commodity Futures Trading Commission, ends a years-long investigation into the exchange.

Binance, which admitted that it allowed transactions with Hamas and other terrorist groups on the platform, was charged with three counts, including anti-money laundering, operating an unlicensed money transmitting business, and violating US sanctions.

The exchange is paying a criminal fine of $1.8bn and forfeiting $2.5bn, according to court filings unsealed Tuesday.

The CEO of Binance faces as many as 10 years in prison but is expected to get no more than 18 months under a plea deal that appears to have saved him from the harsh penalties that other prominent crypto criminals have faced.

The Justice Department hasn’t decided yet what length of a prison term they will seek for him.

Binance’s violations included failure to prevent and report suspicious transactions with terrorists, including Hamas’ Al-Qassam Brigades, Palestinian Islamic Jihad, Al Qaeda, and the Islamic State of Iraq and Syria, according to the Treasury Department.

The announcement comes as Israel and Hamas have been embroiled in a war that began October 07.

Binance also allowed at least 1.1 million transactions, worth more than $898 million, on its platform between customers in the US and Iran, according to the court filing.

“Binance became the world’s largest cryptocurrency exchange in part because of the crimes it committed — now it’s paying one of the largest corporate penalties in U.S. history,” Attorney General Merrick Garland said in a press release.

Money from the fine will be split among the DOJ, CFTC, and other agencies. It includes $3.4bn to the Treasury Department’s Financial Crimes Enforcement Network and $968 million to its Office of Foreign Assets Control over Bank Secrecy Act and sanctions violations.

Crypto Crackdown

The resolution against the world’s largest cryptocurrency exchange and its top leader represents one of the largest penalties imposed within the cryptocurrency industry, which has been facing withering scrutiny from the Justice Department, other government agencies, and lawmakers.

Binance, which exploded onto the crypto scene in 2017 and almost immediately took on and surpassed larger rivals, saw its market share surge to more than 60% worldwide after the fall of FTX in November 2022. Since then, its combined market share for spot crypto and derivatives has declined to less than 44% this month, according to researcher CCData.

The Justice Department recently prosecuted FTX co-founder Sam Bankman-Fried in New York for allegedly orchestrating a multibillion-dollar misappropriation of customer funds that led to the cryptocurrency exchange’s collapse. Bankman-Fried was convicted of fraud following a high-profile criminal trial.

Both the CFTC and Securities and Exchange Commission sued Binance and Zhao earlier this year alleging a range of violations, including mishandling customer funds and allowing Americans to illegally access the platform. Tuesday’s settlement resolves the CFTC case but the SEC lawsuit is ongoing.

Zhao worked at Bloomberg LP, the parent company of Bloomberg News, from 2002 to 2005.

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Posted on: 2023-11-22T12:19:12+05:00