Binance CEO Steps Down After $4 Billion DOJ Settlement

Changpeng “CZ” Zhao, founder of the world-renowned cryptocurrency exchange Binance, is resigning from his CEO post. This significant development forms part of a substantial $4 billion settlement with the U.S. Department of Justice (DOJ), as per insiders familiar with the matter. More specifically, “Binance has agreed to forfeit $2.5 billion to the government, as well as to pay a fine of $1.8 billion,” according to CNBC.

In a setback for Binance and its founder Zhao earlier this year, the Securities and Exchange Commission (SEC) accused them of operating an unregistered exchange and misleading investors. The SEC claimed that Zhao used Sigma Chain, a Switzerland-based fund under his ownership, to artificially inflate trading volumes on Binance’s U.S. platform. SEC Chair Gary Gensler asserted in June that Binance and Zhao carried out a calculated evasion of the law and a range of deceptive activities.

In addition to stepping down from his leadership role, Zhao has agreed to plead guilty to the DOJ’s anti-money laundering charges and pay a fine of $50 million, according to the New York Times. The settlement involves the DOJ as well as the Commodities Futures Trading Commission (CFTC), while the SEC is currently not involved.

The SEC’s allegations followed similar charges from the CFTC, which accused Binance of providing U.S. citizens with crypto derivatives, including futures and options contracts, without the necessary registration.

Last year, Binance revealed the formation of a Global Advisory Board that includes distinguished former U.S. Senator and Ambassador to China Max Baucus and other notable individuals, such as David Plouffe, President Obama’s former campaign manager, and Bruno Bézard, ex-head of the French Treasury.

Initiated by the Chinese-born entrepreneur in 2017, Binance quickly soared from obscurity to become a prominent player in the crypto industry. Despite its status as the world’s largest crypto exchange, the company has faced regulatory scrutiny globally. Its aggressive expansion, often without requisite permissions, and allegations of involvement in illicit activities have raised concerns.

In 2021, the U.K.’s Financial Conduct Authority barred Binance’s U.K. unit due to noncompliance with regulated activities. Their plans to acquire a full U.K. license also fell through due to inadequate anti-money laundering controls. These developments reflect the delicate balance between rapid growth and necessary regulatory adherence in the fast-paced crypto landscape.