Binance Pleads Guilty To Money Laundering, Faces Over $4 Billion In Fines

The DOJ has announced that Binance pleaded guilty to money laundering, and faces over $4 billion in fines, and Mr. Zhao consents to resign as CEO of Binance.

The founder of Binance, the largest cryptocurrency exchange in the world, Changpeng Zhao, entered a guilty plea to charges of money laundering, agreed to resign, and paid a fine of $50 million. Meanwhile, Binance must make a “complete exit” from the United States and pay over $4 billion in fines to settle criminal charges.

Binance and Mr. Zhao decided to enter into a plea agreement with several U.S. federal agencies, including the Department of Justice (DOJ) and the Department of the Treasury, after a years-long investigation into the operations of the cryptocurrency exchange.

Binance agreed to pay over $4 billion in penalties as well as admit admission to criminal charges as part of the comprehensive settlement.

According to a court document, the cryptocurrency platform was accused of three crimes: conspiracy to establish an unauthorized money transmission company, money laundering, and violating U.S. sanctions.

Mr. Zhao consented to resign as CEO of Binance after entering a guilty plea in court on Tuesday in Seattle, Washington, for failing to keep up a successful anti-money laundering program.

“Today, I stepped down as CEO of Binance. Admittedly, it was not easy to let go emotionally. But I know it is the right thing to do. In a post on X, he stated, “I made mistakes, and I must take responsibility.”

According to the DOJ, Binance has consented to forfeit $2.5 billion and pay a $1.8 billion criminal fine as part of the plea agreement.

Attorney General Merrick Garland said in a statement that 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.”

‘Complete Exit From the United States’

In addition to facing a $4.3 billion total financial penalty, Binance has committed to strengthening its anti-money laundering and sanctions compliance programs and hiring an independent compliance monitor for a period of three years.

The Treasury Department claims that among Binance’s transgressions was its failure to stop and report suspected transactions with terrorist organizations, such as ISIS, Palestinian Islamic Jihad, Al Qaeda, and Hamas’s Al-Qassam Brigades.

“Binance turned a blind eye to its legal obligations in the pursuit of profit,” Treasury Secretary Janet Yellen said in a press release. “Its willful failures allowed money to flow to terrorists, cybercriminals, and child abusers through its platform.”

Moreover, the Treasury Department claims that the cryptocurrency company did not stop or report questionable transactions from a plethora of ransomware attackers, money launderers, and other criminals, nor did it match trades between American users and those in sanctioned nations like North Korea and Iran.

In a lawsuit filed on Monday, Sam Bankman-Fried’s parents have been accused of being involved in Democratic dark money and ‘illegal’ election tactics.

The Treasury Department’s Financial Crimes Enforcement Network (FinCEN) will receive $3.4 billion of the penalties imposed on Binance, with the remaining funds being distributed to other government agencies.

In a statement, Treasury stated that the company’s violations of U.S. anti-money laundering and sanctions laws compromised “America’s national security and the integrity of the international financial system.” FinCEN’s settlement also mandates a five-year monitorship and “Binance’s complete exit from the United States.”

The Office of Foreign Assets Control (OFAC) has mandated that Binance comply with a number of stringent sanctions compliance requirements, and Binance will also be required to pay a $969 million financial penalty to the organization.

“To ensure that Binance fulfills the terms of its settlement—including that it does not offer services to U.S. persons—and to ensure that illicit activity is addressed, Treasury will retain access to books, records, and systems of Binance for a period of five years through a monitor,” Treasury said.

Treasury stated that Binance might be subject to “substantial” further fines if it fails to fulfill its settlement requirements. This includes a $150 million suspended penalty that FinCEN would collect in the event that Binance violates the requirements of the monitorship and other obligations related to compliance.

More Details

According to the DOJ, court records reveal that Binance acknowledged putting expansion and profits ahead of following US law, which prevented it from registering with FinCEN and putting anti-money laundering safeguards in place.

Binance kept important U.S. clients, including priceless “VIP” customers, even after declaring a ban on U.S. consumers in 2019. The exchange never submitted a suspicious activity report (SAR), did not routinely monitor transactions, and lacked efficient know-your-customer (KYC) procedures.

Trillions of dollars worth of transactions were made possible by Binance’s noncompliance, which brought in over $1.6 billion in profit. A lack of procedures to identify money laundering threats was disclosed in internal communications, which attracted criminal actors to the exchange. Furthermore, Binance intentionally enabled transactions between American users and those in prohibited areas, resulting in roughly $898 million in such transactions from 2018 to 2022.

“From the beginning of its existence, Binance and founder Changpeng Zhao chose growth and personal wealth over following financial regulations aimed at stopping the laundering of criminal cash,” Acting U.S. Attorney Tessa M. Gorman for the Western District of Washington State said in a statement.

Although the DOJ stated that Binance “did not make a timely and voluntary disclosure of wrongdoing,” the company was given some credit for its cooperation with the investigation.

Richard Teng is the new CEO of Binance, following Mr. Zhao’s decision to resign.

“It is an honor and with the deepest humility that I step into the role of Binance’s new CEO,” he stated in a statement.

Prior to being appointed as Binance’s new CEO, Mr Teng served as the company’s Global Head of Regional Markets.

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