Changpeng Zhao, also known as CZ, will be stepping down from Binance, the cryptocurrency company he founded in 2017, as part of an agreement with the Department of Justice and U.S. regulators. This settlement comes after CZ, the CEO of Binance, agreed to plead guilty to money laundering violations. As part of the deal, CZ will pay a $50 million fine, while Binance will pay $4.3 billion in fines. Despite these penalties, Binance will be allowed to continue its operations.
The announcement of this settlement follows the recent conviction of Sam Bankman-Fried, the founder of FTX, on seven criminal charges, including fraud and money laundering. Attorney General Merrick B. Garland stated that Binance's success as the world's largest cryptocurrency exchange was partly due to the crimes it committed. The Department of Justice plans to maintain its aggressive stance against crypto players, emphasizing that using new technology to break the law makes one a criminal, not a disruptor.
The settlement with the Department of Justice and the commodities regulator resolves the investigations into Binance, although the company may still face penalties from the Securities and Exchange Commission. Treasury Secretary Janet Yellen expressed that these agreements will put an end to Binance's behavior that posed risks to the U.S. financial system and national security.
Binance acknowledged its past compliance violations and lack of proper controls in a statement, stating that the resolutions allow the company to move forward from this challenging chapter. Binance, known as a one-stop shop for cryptocurrency investors, has seen its market share grow after FTX's collapse but has faced scrutiny from regulators and witnessed the departure of top executives.
Although this settlement provides some relief for Binance, its legal troubles are not yet over. The Securities and Exchange Commission, under the leadership of Chair Gary Gensler, has been actively targeting the cryptocurrency industry. The SEC has accused Binance and CZ of engaging in deceptive practices, conflicts of interest, lack of disclosure, and evasion of the law. These charges include allegations of failing to separate U.S. and international businesses as required and facilitating illicit activities such as money laundering.
In conclusion, CZ's departure from Binance and the settlement with U.S. regulators mark a significant development in the ongoing legal challenges faced by the cryptocurrency company. While the agreement allows Binance to continue operating, it also serves as a warning to other crypto players to adhere to U.S. regulations. The SEC's continued scrutiny suggests that Binance may still face further consequences for its actions.