On the morning of November 22, the cryptocurrency market witnessed a surge of activity as news broke that Binance had agreed to pay a fine, and its CEO Changpeng Zhao (CZ) had resigned.
Specifically, Binance will pay a fine of up to $4.3 billion to “close the chapter” on its legal case with the U.S. Department of Justice (DOJ) within the next 15 months.
According to the DOJ’s complaint, Binance faced three charges:
1. Conspiring to conduct and manage unregistered money transfer activities.
2. Violating U.S. federal banking secrecy laws, federal trade regulations, and international laws.
3. Violating U.S. financial sanctions regulations.
Regarding Changpeng Zhao (CZ), after Binance announced the fine, he promptly announced his resignation as the CEO of the exchange and pleaded guilty to violating anti-money laundering requirements in a federal court in Seattle on November 22. This was part of a recent $4 billion settlement deal offered by the DOJ. Richard Teng will be the new CEO of Binance.
“Today, I have resigned as the CEO of Binance. I must admit that letting go is not easy. But I know it’s the right thing to do. I made a mistake, and I must take responsibility. This is the best thing for our community, for Binance, and for myself.”
Changpeng Zhao (CZ)
In addition to the fine, CZ is personally required to pay $50 million and is banned from participating in the operation of Binance for three years from the date of designation. However, CZ will remain the largest shareholder of Binance. Notably, DOJ prosecutors are recommending an 18-month prison sentence for CZ, in line with federal guidelines.
Furthermore, U.S. authorities have also accused Binance’s former Chief Compliance Officer, Samuel Lim, of misconduct during the investigation.
Binance, Changpeng Zhao, and Samuel Lim are prohibited from making public statements contrary to what was outlined in the plea agreement.
In addition, the exchange will have to appoint an independent monitor to oversee its legal compliance operations for the next five years, reporting progress to U.S. authorities. The U.S. Department of the Treasury will have access to the exchange’s systems and data. Binance is prohibited from operating in the United States.
On the morning of November 22, Changpeng Zhao appeared before a Seattle court, pleading guilty to “failing to impose anti-money laundering regulations.”
In CZ’s defense, his lawyers emphasized that he had cooperated with U.S. authorities’ investigations since 2020 and voluntarily flew from his current residence in the UAE, a country with no extradition treaty with the U.S., to face the charges, demonstrating his compliance and sincerity.
CZ’s sentencing is expected to take place on February 23, 2024, and the former Binance CEO could face an 18-month prison sentence.
During the waiting period for his sentencing, CZ has proposed that he may return to the UAE to reunite with his family and has committed to return to the U.S. to serve his sentence when the court rules. Binance’s founder has also posted bail with a value of $175 million.
It is worth noting that, according to Protos and ChainArgos, Binance transferred approximately $3.9 billion USDT from the “Binance-Cold 2” cold wallet on the TRON network to the “Binance 3” hot wallet on November 9. It is unclear whether this action is related to the fine demanded by the U.S. Department of Justice. Furthermore, $300 million of this amount was subsequently transferred to the “Binance-Hot 7” wallet.
ChainArgos also noted that this is one of the largest USDT transfers on the Tron network to date.
Earlier, on the morning of November 13, on-chain detective ZachXBT discovered a cryptocurrency wallet that had lost $27 million. Notably, this wallet was associated with the Binance Deployer, leading to suspicions that Binance may have been hacked.