Changpeng Zhao, the founder of Binance, the world’s largest cryptocurrency exchange, has agreed to plead guilty to money laundering violations, according to court documents made public Tuesday, a major blow to the most powerful figure and the most influential in the global crypto industry.
Binance itself also agreed to plead guilty and pay $4.3 billion in fines and restitution, according to documents filed in federal court in Seattle.
As part of his guilty plea, Mr. Zhao agreed to pay a $50 million fine and will also step down as chief executive of the company. Binance, as part of its plea agreement with federal prosecutors, will agree to the appointment of a monitor, and Mr. Zhao will be barred from any involvement in Binance’s affairs until three years after the monitor’s appointment.
Court documents, dated November 20, indicate that criminal charging documents were filed by federal prosecutors against Binance and Mr. Zhao on November 14. Mr. Zhao’s lawyers could not be reached for comment.
The court documents described wide-ranging efforts by Mr. Zhao and other top Binance employees to avoid laws that require them to refrain from transacting with people barred from the U.S. financial system due to sanctions. economic, and to properly register any company based in the United States. regulators. Customers from Iran, Cuba and Syria – all of which are under sanctions – were able to access the Binance platform.
In addition to illegal foreign transactions, Binance did business with US-based companies, even though it was not supposed to have US customers on its Binance.com platform. Instead, another platform, Binance.US, which Mr Zhao also owned, was required to manage the activity and comply with US anti-money laundering laws. But Mr. Zhao and other Binance employees believed it would be better for the major cryptocurrency exchange to cater to large U.S. customers, according to court filings.
According to the filings, Mr. Zhao, widely known as CZ, personally sought to hide Binance’s relationships with large U.S. clients – called VIPs and managed by a special manager – in order to “ensure that agencies American surveillance systems do not cause any problems. »
The filing cites a June 2019 call in which Mr. Zhao advised other Binance employees to speak to U.S.-based VIP customers using methods such as phone calls that would leave “no trace” of the interactions.
For the relatively young and rapidly growing world of crypto, Tuesday’s proceedings were a monumental development, given Binance’s global reach and Mr. Zhao’s prominent role as an industry leader. At times, Binance processed two-thirds of all digital currency transactions, making it a vital broker and intermediary in the crypto world.
Long considered the richest man in crypto, Mr. Zhao has often been cagey about his movements, even though he has done so. has gathered more than 8.5 million followers on X, the platform formerly known as Twitter. Earlier this year, he was in the United Arab Emirates, which does not have an extradition agreement with the United States.
Mr. Zhao’s Latham & Watkins lawyers were not immediately available for comment.
Mr. Zhao’s guilty plea completed something of a one-two punch from the Justice Department. Earlier this month, crypto entrepreneur Sam Bankman-Fried was convicted of fraud in a criminal trial stemming from the collapse of his crypto exchange FTX.
Since FTX’s implosion a year ago, federal authorities have criminally charged a parade of crypto executives, and the Securities and Exchange Commission has filed lawsuits against some of the industry’s biggest companies, including Coinbase, the exchange American listed on the stock exchange. On Monday, the SEC sued Kraken, another cryptocurrency exchange, accusing it of operating without proper registration and commingling customer deposits with its own business assets.
This is a developing story. Check back for updates.
Alan Rappportreports contributed.