Recently, according to sources from Bloomberg, Binance held a closed-door meeting in September 2023 in Singapore to update its VIP members, including select market makers and traders, on the current situation of the exchange and its plans to counter ongoing legal challenges. During this meeting, representatives from the company reportedly proposed to VIP attendees that Binance might consider paying approximately $4 billion to settle its legal issues with the U.S. Department of Justice (DOJ). Binance asserted its ability to cover this sum and assured that the exchange would continue its operations smoothly without disruptions.
Notably, Changpeng Zhao (CZ), Binance’s former CEO, was absent from the gathering, while Richard Teng, the new CEO, attended but was instructed to maintain anonymity.
Two months after the closed-door meeting, U.S. authorities, including the DOJ, the Department of the Treasury, and the Commodity Futures Trading Commission (CFTC), officially engaged in discussions with Binance regarding the resolution of criminal allegations related to bank fraud, money laundering, and violations of financial sanctions, with penalties potentially reaching $4 billion.
With this enormous sum, it becomes one of the largest corporate settlements in U.S. history. DOJ has emphasized that the $4 billion fine is necessary to allow Binance to continue operating without facing prosecution and posing a threat to the stability of the cryptocurrency industry.
After a period of consideration, Binance ultimately accepted a settlement, agreeing to pay a $4.3 billion penalty, along with the condition of “disqualification” of CEO Changpeng Zhao, thereby concluding the long-standing DOJ investigation.
It is worth noting that DOJ had been investigating Binance and its executives since 2020 on allegations of money laundering, but formal charges had not been filed.
In addition to the DOJ, Binance also faced legal action from two other U.S. financial regulators: the Commodity Futures Trading Commission (CFTC) in March 2023 and the Securities and Exchange Commission (SEC) in June 2023. These actions brought serious allegations of misconduct related to the management and listing of cryptocurrencies considered securities.
While Binance has denied these allegations, the legal troubles have significantly impacted Binance’s operations in the United States.
CZ’s absence was not limited to the closed-door meeting; he also missed Binance’s conference in Istanbul the previous month. During that time, CZ chose to stay in the United Arab Emirates (UAE), which does not have an extradition agreement with the United States. However, after receiving a summons, CZ voluntarily flew to the United States to participate in the hearing.
Leaked information from Binance leadership calls indicated that CZ had been considering resignation since May. By that time, the legal tensions were escalating as negotiations with the DOJ were failing, and some officials were pressuring CZ to face stricter penalties.