Published
5 months ago on
November 22, 2023
Table of Contents
- Unsealed Indictment Details of Binance and CZ’s Alleged Misconduct
- CZ Must Return to the US 14 Days Prior to Sentencing
- Changpeng “CZ” Zhao Speaks Out
- Richard Teng Named as Binance CEO
- How the Mighty Have Fallen
Binance founder CZ will be released from custody after agreeing to pay a $175 million personal recognizance bond. Zhao’s release comes just hours after the shocking revelation that he pleaded guilty to violating the Bank Secrecy Act.
The most significant scandal since Sam Bankman-Fried’s FTX crypto empire's fall is unfolding. Binance, the world’s largest crypto exchange, was criminally charged with violating anti-money laundering laws and sanctions. Binance CEO Changpeng “CZ” Zhao has stepped down from his role as CEO after the exchange settled charges with the Department of Justice (DOJ) and agreed to pay a record-breaking fine of $4.3 billion.
Unsealed Indictment Details of Binance and CZ’s Alleged Misconduct
According to a court filing which was unsealed on Tuesday, Binance allegedly failed to maintain appropriate anti-money laundering measures, operated an unlicensed money-transmitting business and violated sanctions law.
The filing reads:
“…operated an unlicensed money transmitting business ("MTB") in violation of U.S. law. Defendant operated as an unlicensed MTB in part to prevent U.S. regulators from behalf of its customers, including U.S. customers, without implementing appropriate "know your customer" ("KYC") procedures, conducting adequate transaction monitoring, 9 or establishing sufficient controls that would have prevented its U.S. customers from 10 engaging in transactions in violation of U.S. sanctions and to prevent Defendant from 11 processing other transactions involving illicit proceeds.
As a result, Defendant willfully caused millions of dollars of cryptocurrency transactions between U.S. persons and persons in jurisdictions that are subject to comprehensive U.S. sanctions in violation of IEEPA.
Due to its willful failure to implement an effective AML program, Defendant processed transactions by users who operated illicit mixing services and laundered proceeds of dark.net market transactions, hacks, ransomware, and scams. In part because of this scheme, and because Defendant prioritized growth, market share, and profits over compliance with U.S. law, Defendant Binance Holdings Limited doing business as Binance.com ("Binance") became the largest cryptocurrency exchange in the world.”
CZ Must Return to the US 14 Days Prior to Sentencing
According to reports, CZ will pay the bond securing his release and will agree to return to the US 14 days before his February 23, 2024 sentencing. Zhao will further pay a $50 million fine in addition to his stepping down as Binance chief. Zhao’s bail order has not been finalized and is expected to be reviewed by the US. If a judge denies the review of the order, it will take effect at 5 pm Washington time, November 27. Should a judge grant a review before that date, CZ must remain in the US until a decision is reached.
In a November 21 bond document, Zhao agreed to update the court on his whereabouts and agreed that an arrest warrant could be issued should he fail to appear for his scheduled court date. Failure to appear in court carries a $250,000 fine and up to 10 years in prison.
Changpeng “CZ” Zhao Speaks Out
Binance’s former CEO took to X (formerly Twitter) to discuss the ordeal.
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. This is best for our community, for Binance, and for myself.
— CZ 🔶 Binance (@cz_binance) November 21, 2023
Binance is no longer a baby. It is…
While stepping down as chief of the exchange, CZ admitted to making mistakes and acknowledged that responsibility must be taken.
In his post, CZ said:
“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. This is best for our community, for Binance, and for myself. Binance is no longer a baby. It is time for me to let it walk and run. I know Binance will continue to grow and excel with the deep bench it has.”
Richard Teng Named as Binance CEO
In his commentary regarding the Binance-ordeal, Zhao announced that former Global Head of Regional Markets, Richard Teng, will take over as CEO.
Teng also spoke out on X and assured Binance customers of plans for the exchange.
It is an honour and with the deepest humility that I step into the role of Binance’s new CEO.
— Richard Teng (@_RichardTeng) November 21, 2023
We operate the world's largest cryptocurrency exchange by volume. The trust placed on us by our 150m users and thousands of employees is a responsibility that I take seriously and hold…
In a lengthy post, Teng said:
“My focus will be on: 1) reassuring users that they can remain confident in the financial strength, security and safety of the company 2) collaborating with regulators to uphold high standards globally that foster innovation while providing important consumer protections 3) working with partners to drive growth and adoption of Web3”
How the Mighty Have Fallen
Binance’s woes come at a rather precarious time for the crypto industry. Investors and customers of the crypto market are still reeling from the effects that followed the spectacular failure of Sam Bankman-Fried and his FTX empire. In a somewhat ironic Twitter post during the collapse of FTX, Binance and CZ were in talks with FTX about a possible acquisition of the exchange. After conducting due diligence, Binance, however, backed out of the deal.
Sam Bankman-Fried was recently found guilty on all seven charges of wire fraud, securities fraud, and money laundering conspiracy for his involvement in FTX.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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