U.S. Enforcement Actions Against Binance
Changpeng Zhao, the founder and CEO of Binance, has agreed to plead guilty to money laundering violations and step down from his role as part of a $4.3 billion settlement with the U.S. Department of Justice (DOJ).
This settlement comes after a years-long probe into Binance's operations, with the DOJ and the Commodities Futures Trading Commission (CFTC) investigating the exchange for various alleged violations. The charges against Binance and Zhao include operating an unlicensed exchange trading, breaching sanctions regulations, and facilitating illicit transactions, including those related to terrorist groups, child sexual abuse materials, and ransomware proceeds.
Binance has been accused of playing a significant role in a money laundering scheme, leading to substantial legal consequences. DOJ has charged Binance with conducting an unlicensed money transmitting business, a conspiracy charge, and violating the International Emergency Economic Powers Act. The indictment alleges that Binance enabled hundreds of millions of dollars in transactions between American users and users subject to U.S. sanctions, including those in Iran, Syria, and Russian-occupied Ukraine, as well as transactions with terrorist groups such as ISIS. Additionally, Binance is accused of processing around $275 million in both deposits and withdrawals to BestMixer, a cryptocurrency «mixing» service, and facilitating over $106 million in direct flows of money from the Russian dark web market Hydra, which offered narcotics, stolen data, and money laundering services.
The consequences of these charges have been substantial. Binance has agreed to plead guilty, accept the appointment of a monitor, and pay a criminal fine of nearly $1.81 billion, as well as a $2.51 billion order of forfeiture to settle three criminal charges. Furthermore, Binance's founder, Changpeng Zhao, has agreed to plead guilty to money laundering charges and pay a $50 million fine as part of his plea deal.
The news of Binance's plea deal and the resignation of its CEO, Changpeng Zhao, has had a notable impact on the market and Binance's native token, BNB. The market has responded negatively in the short term to the Binance news, with BNB and a range of smaller cryptocurrencies declining following the announcement. BNB fell by 10% in response to the news. The overall crypto market cap fell by 4.66% on the day of the announcement, reflecting the impact of the $4 billion payment for charges against Binance.
From our point of view, Changpeng Zhao's resignation as CEO of Binance and the settlement with the U.S. government represent a significant turning point in the regulatory landscape for cryptocurrency exchanges. The enforcement actions against Binance and its founder underscore the increasing scrutiny and accountability faced by players in the crypto industry, with far-reaching implications for the market as a whole.
The whole text of the settlement you can find here.
