Changpeng Zhao, the founder and CEO of Binance, the world's largest cryptocurrency exchange, has pleaded guilty to violating U.S. anti-money laundering laws and has stepped down from his position. This development comes as part of a settlement with the United States Department of Justice (DoJ) involving several federal agencies, which includes fees of more than $4 billion.
As part of the settlement, Binance will pay $1.81 billion within 15 months, and a further $2.51 billion forfeiture. The company has also set aside $8 billion for the settlement. This marks the largest fine ever levied against a crypto firm.
The Justice Department accused Zhao of turning Binance into a massive money-laundering hub for terrorists, cybercriminals, and customers in sanctioned countries such as Iran and Russia. The company was found to have processed transactions by illicit actors, supporting activities from child sexual abuse, to illegal narcotics, to terrorism, across more than 100,000 transactions.
In addition to the fines, Binance will have to appoint an independent compliance monitor for three years and report its compliance efforts to the U.S. government. The U.S. Treasury will monitor Binance for five years and ensure its complete exit from the United States.
Richard Teng, a former Abu Dhabi regulator and later Binance's regional markets head, will take over as CEO. Binance's former chief compliance officer Samuel Lim was also charged by the CFTC.
This is the latest blow to the cryptocurrency industry, which has been marred by scandals and fraudulent behaviour. Zhao, a Canadian national, pleaded guilty to one count of failure to maintain an effective anti-money laundering programme.