The Chief Executive Officer of Binance, the world’s largest cryptocurrency exchange, is poised to resign and plead guilty to violating criminal U.S. anti-money laundering regulations, as disclosed by individuals familiar with the matter.
Changpeng Zhao is expected to make his plea in a Seattle federal court on Tuesday afternoon, with Binance, owned by Zhao, also entering a guilty plea to a criminal charge and agreeing to pay fines totaling $4.3 billion. This sum includes settlements for civil allegations made by regulators.
This resolution would bring an end to the protracted investigations surrounding Binance, founded by Zhao in 2017, which has become a pivotal hub in the global cryptocurrency market. The ongoing criminal probe has cast a shadow over the company, despite its initial market share growth following the collapse of FTX, one of its primary offshore competitors, last year.
Recent executive departures and workforce reductions at Binance underscore the challenges faced by the company amid the U.S. probes.
As part of the deal, Zhao would maintain majority ownership of Binance but relinquish his executive role. Sentencing for Zhao would be determined at a later date. This outcome echoes a prior case involving BitMEX executives, where the former CEO, Arthur Hayes, pleaded guilty to anti-money laundering violations and received a two-year probationary sentence.
The Justice Department declined to comment on the matter.
It is worth noting that the announced deal does not include a settlement with the Securities and Exchange Commission (SEC), which filed a lawsuit against Binance and Zhao in June, alleging violations of U.S. investor protection laws. Major cryptocurrency exchanges, including Binance, have opted to contest legal matters with the SEC, asserting that cryptocurrencies do not fall within the SEC’s regulatory purview.
The Department of Justice’s investigation focused on Binance’s anti-money laundering program, examining whether it permitted individuals from sanctioned countries, such as Iran and Russia, to trade with Americans on the platform.
Additionally, a separate agreement is expected to resolve a civil lawsuit filed against Binance and Zhao earlier this year by the Commodity Futures Trading Commission (CFTC), which claimed that Binance lacked a program to prevent terrorist financing and money laundering. The CFTC also alleged that Binance provided Americans access to derivatives that, under U.S. regulations, should only be traded on regulated platforms.
Zhao, residing in the United Arab Emirates, has limited his travel this year. While the U.A.E. lacks a mutual extradition treaty with the U.S., the two countries have a treaty facilitating law enforcement evidence sharing, signed last year.
Despite global regulatory crackdowns on the unregulated cryptocurrency industry, the U.A.E. has remained supportive of crypto. Zhao’s residency became a focal point in negotiations between the government and Binance over several months, according to sources familiar with the discussions.
