Binance to Exit US Market and Settle Record-Breaking $4.3 Billion Settlement

In a historic move, Binance has agreed to leave the U.S. market and pay a staggering $4.3 billion to resolve severe anti-money laundering and sanctions violations, marking one of the largest corporate penalties in American history, the Department of Justice revealed today.

This monumental decision comes following an extensive criminal investigation spanning years, focusing on the company’s operations and leadership. CEO Changpeng Zhao’s resignation, coupled with his admission of guilt regarding anti-money laundering infractions and a separate $50 million fine, further underscore the gravity of the situation.

As part of the settlement, Zhao is barred from any present or future involvement with the company for a minimum of three years, as stipulated by the plea agreement.

The charges against Binance highlight a profit-driven approach that disregarded legal compliance, allowing unchecked flow of funds related to terrorism, cybercrime, and other illicit activities. The Department of Justice emphasized that Zhao recognized the significance of U.S. users for Binance’s growth and revenue, yet knowingly overlooked the necessity of an effective Anti-Money Laundering (AML) program that would have included Know Your Customer (KYC) protocols.

Attorney General Merrick Garland, in a press conference, revealed startling internal chats indicating a lax attitude towards compliance within Binance. These conversations underscored a prioritization of growth over adherence to U.S. law, revealing a culture that seemingly disregarded regulatory compliance.

Notably, Binance failed to prevent illegal trades amounting to over $898 million between U.S. users and individuals in sanctioned countries like Iran. In the resolution, Binance forfeited more than $2.5 billion and settled a $1.8 billion criminal fine.

Zhao’s individual plea pertains to the absence of anti-money laundering controls within the exchange and violations of the Bank Secrecy Act, mirroring charges previously faced by BitMEX founder Arthur Hayes, who settled with a $10 million criminal fine and received a two-year probation sentence.

The Department of Justice intends for this resolution to serve as a stern warning to cryptocurrency exchanges catering to U.S. clientele, emphasizing the necessity of adherence to legal frameworks.

Attorney General Garland firmly asserted that utilizing innovative technology to flout the law constitutes criminal behavior, underscoring the Justice Department’s unwavering stance against actions that jeopardize economic institutions and public trust.

It is worth noting that Zhao is set to pay a $175 million release bond and commit to returning to the United States two weeks ahead of his February 23, 2024 sentencing, potentially allowing him to go back to Dubai.

According to a bond document filed on November 21 in a Seattle federal court, Zhao will disclose his residence and risks a warrant for arrest if he misses the court date. Non-appearance entails a $250,000 penalty and a maximum of 10 years in prison.

Zhao has placed $15 million in a separate trust account tied to the bond, forfeitable upon breach of bond conditions, alongside two guarantors pledging $250,000 and $100,000, respectively.

Nevertheless, Binance sent out an official response to its community. Key points included:

• Binance acknowledges historical compliance violations and emphasizes its commitment to a transformed chapter marked by enhanced compliance and governance. The company highlights its significant structural changes and new leadership with extensive compliance experience.
• Binance reaffirms its core values of user security and safety, emphasizing the safeguarding of user assets and refuting specific allegations from U.S. agencies, which do not allege that Binance misappropriated any user funds or engaged in any market manipulation.
• With former CEO CZ remaining a majority shareholder and new CEO Richard Teng’s wealth of regulatory expertise, Binance is poised for long-term growth.
• The company underscores its strides in compliance, security, law enforcement cooperation, and transparency, positioning itself as a strong industry leader.
• Binance expresses confidence in the crypto industry’s future and its commitment to empowering global communities through blockchain technology.