US slaps over $4 billion monetary penalty on Binance as CEO Changpeng Zhao pleads guilty

Binance chief executive Changpeng Zhao on Tuesday (Nov 21) stepped down and pleaded guilty to US money laundering breachesin a deal that will see the cryptocurrency exchange he founded pay over $4 billion in penalties, said prosecutors.

"Binance became the world's largest cryptocurrency exchange in part because of the crimes it committed –- now it is paying one of the largest corporate penalties in US history," Attorney General Merrick Garland said in a statement.

"It made it easy for criminals to move their stolen funds and illicit proceeds on its exchanges," Garland said.

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“Binance also did more than just fail to comply with federal law. It pretended to comply,” he added.

Zhao pleaded guilty to failing to maintain an effective anti-money laundering programme, said the Department of Justice.

He lives abroad and entered his plea in person in the US, Garland added.

He took to his official X account and wrote, "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. I made mistakes, and I must take responsibility," he added.

Zhao who moved to Canada at the age of 12, agreed to pay a $50 million penalty as part of the plea.

Binance's agreements with the Treasury Department's agencies consist of a civil money penalty of $3.4 billion and a $968 million penalty involving OFAC. These mark the agencies' largest settlements in history.

"Binance turned a blind eye to its legal obligations in the pursuit of profit," Treasury Secretary Janet Yellen said in a statement.

"Its willful failures allowed money to flow to terrorists, cybercriminals and child abusers through its platform."

She noted Binance "deliberately undermined its own sanctions monitoring controls," authorised over 1.5 million virtual currency trades breaking US sanctions and failing to report suspicious transactions.

Yellen said the penalties, and a five-year monitorship imposed on Binance, mark a "milestone for the virtual currency industry."

Binance's violations

The violations made by Binance included its negligence in preventing and reporting transactions with groups like the Islamic State of Iraq and Syria, and matching trades between US users and those in sanctioned jurisdictions like Iran and North Korea, said the Treasury.

Binance must file suspicious activity reports required by law, on top of reviewing past transactions to report such activity to authorities, Garland said.

"This will advance our criminal investigations into malicious cyber activity and terrorism fundraising, including the use of cryptocurrency exchanges to support groups such as Hamas," he added.

(With inputs from agencies)