Head of the Largest Crypto Exchange Resigned with Admission that He Laundered Money

The head of Binance, the world's largest cryptocurrency exchange by turnover, has resigned and pleaded guilty to violating US anti-money laundering laws. It's part of a $4.3 billion settlement ending a years-long investigation, prosecutors said Tuesday.

The deal, in which Changpeng Zhao will personally pay $50 million, was described by prosecutors as one of the largest corporate sanctions in US history. This is another blow to the crypto industry, which has been hit by investigations and comes after the recent fraud conviction of FTX founder Sam Bankman-Fried, commented "Reuters". Some of the charges, which are both criminal and civil, relate to practices the news agency first reported in a series of articles in 2022.

But several legal experts said it was a good outcome for Zhao because it leaves his vast wealth intact and allows him to keep his stake in Binance, which he founded in 2017. His fortune is $10.2 billion, according to Forbes.

Binance violated US anti-money laundering and sanctions laws and failed to report more than 100,000 suspicious transactions with organizations the US designates as terrorist groups, including Hamas, al-Qaeda and the Islamic State of Iraq and Syria , authorities said. The exchange also never reported transactions with websites dedicated to the sale of child sexual abuse material It was also one of the biggest recipients of revenue from ransomware (blocking computer networks and then asking their owner to pay a ransom to gain access to them), they said.

"Binance made it easy for criminals to move their stolen funds and ill-gotten gains to their exchanges. Binance did more than just fail to comply with federal law — it pretended to comply," US Attorney General Merrick Garland said on Tuesday.

The Justice Department, which negotiated the settlement with the Commodity Futures Trading Commission (CFTC) and the Treasury Department, is seeking an 18-month prison sentence for Zhao, the maximum suggested under federal guidelines, the New York Times reported.

Zhao, a billionaire, was born in China and moved to Canada at the age of 12. He pleaded guilty in a Seattle court Tuesday afternoon. His withdrawal marks a dramatic development for one of the most powerful figures in the crypto industry, as well as for Binance. The deal raises questions about the future of the crypto exchange, which he tightly controls.

Richard Teng, a longtime Binance executive, will take over the company, Zhao said in the post. But one of his first tasks will be to prevent a mass exodus of customers. In a separate statement, he said his focus would be on "reassuring consumers that they can remain confident in the company's financial strength, security and safety."

Vanderbilt University law professor Yesha Yadav said that while the fine is extremely large, it seems bearable for Binance. "This deal...seems designed to give Binance a chance to survive a little longer while removing Zhao, a figure so inextricably linked to the growth of a business model," she said. Since he appears to be retaining his stake in Binance, however, it's possible he could still exert influence over the company, Yadav added.

Prosecutors likely weighed those benefits to Zhao against the possibility that he would not surrender and Binance would not agree to pay a hefty sum, said Jeffrey Cohen, an assistant professor at Boston College Law School and a former federal prosecutor. "If you can get a good amount for a corporate fine, and the cost is that the individual defendants get a little less punishment, the government makes that count," Cohen explained.

Keith Sambur, a partner at the Dallas law firm Haynes Boone, noted that the size of the fines clearly shows that the US government wants to rein in the crypto sector, describing the financial size of the deal as "staggering."

We need your support so Novinite.com can keep delivering news and information about Bulgaria! Thank you!