The U.S. Treasury Department has disclosed that Binance, a prominent cryptocurrency exchange platform, significantly neglected to report over 100,000 questionable transactions, some involving entities like Hamas and North Korea.
Changpeng Zhao, the founder and CEO of Binance, has announced his resignation following this revelation.
In a major shake-up at the world’s largest cryptocurrency exchange, Binance, CEO Changpeng Zhao will resign. This follows the company’s admission of guilt on charges of violating anti-money laundering statutes, including the Bank Secrecy Act.
Facing the most substantial penalty ever imposed by the Treasury Department, Binance has agreed to a settlement exceeding $4.3 billion.
Treasury Secretary Janet Yellen highlighted Binance’s repeated and significant breaches of U.S. anti-money laundering and sanctions laws in her official statement.
The Justice Department announced that alongside the company, Changpeng Zhao also admitted to inadequacies in maintaining an efficient anti-money laundering framework and confirmed his departure from the CEO position.
Binance has consented to a comprehensive settlement with the Department of Justice, which includes a staggering $4 billion payment.
Attorney General Merrick B. Garland emphasized the role of Binance’s unlawful activities in its rise to prominence, resulting in one of the heftiest corporate fines in U.S. history.
Zhao acknowledged his resignation and past errors on a social media platform X, naming Richard Teng, head of regional markets at Binance, as his successor. He will continue as a shareholder and advisor to the company.
The settlement necessitates the appointment of an independent monitor, supervised by the Treasury’s Financial Crimes Enforcement Network, to ensure Binance’s adherence to federal regulations.
Binance expressed in a blog post its responsibility for past compliance failures, viewing this resolution as an opportunity for significant growth and learning.
The company’s statement outlined their commitment to enhanced compliance and governance practices, anticipating a bright future for both Binance and the broader cryptocurrency sector.
Binance’s failure to report over 100,000 suspicious transactions, including those linked to sanctioned groups and countries, was particularly highlighted by the Treasury Department.
The Justice Department pointed out the lack of effective protocols at Binance to identify and report money laundering risks.
Binance also neglected to report transactions linked to websites involved in the distribution of child sexual abuse materials, according to the Treasury.
Despite creating a U.S.-focused offshoot, Binance.us, in response to regulations, the parent company continued to service a significant number of U.S. customers, bypassing stricter oversight.
The settlement comes amidst a tumultuous period in the cryptocurrency world, marked by the downfall of several major exchanges. Despite this, Bitcoin’s value showed resilience.
This guilty plea follows the recent conviction of Sam Bankman-Fried, Zhao’s key rival in the crypto space, for fraud.
The latest developments also coincide with the Securities and Exchange Commission’s actions against another cryptocurrency exchange, Kraken, for regulatory non-compliance. Kraken has vowed to contest these charges.