NEW YORK, Nov 21 (Reuters) – Binance chief Changpeng Zhao will resign and plead guilty to violating U.S. anti-money laundering criminal laws as part of a $4 billion settlement ending a years-long investigation into the world’s largest crypto exchange, prosecutors said. Tuesday.
The agreement with the Justice Department, detailed in court filings, is part of a broader agreement between the company and other U.S. agencies, including the Commodity Futures Trading Commission (CFTC) and the Treasury Department, according to two sources close to the case.
The agreement will resolve criminal charges for conducting an unlicensed money transmitting activity, conspiracy and violating sanctions regulations, the filing said.
The company will pay $1.81 billion within 15 months, plus an additional forfeiture of $2.51 billion as part of the deal with the Justice Department, prosecutors said. Zhao will personally pay $50 million.
Zhao’s plea deal also prohibits him from any involvement with Binance. His plea hearing was scheduled for 10:45 a.m. PT (1:45 p.m. ET) in Seattle.
Former Binance compliance officer Samuel Lim will also be charged as part of the settlement, a source said, adding that Binance will also be required to address its shortcomings.
Lawyers for Zhao and Binance, as well as a company spokesperson, did not respond to calls for comment. Neither Lim nor his lawyers immediately responded to requests for comment.
Binance has been under Justice Department scrutiny since at least 2018, Reuters reported last year, which is just one of several legal issues it faces in the United States.
The agency’s federal prosecutors asked the company in December 2020 to provide internal documents about its anti-money laundering efforts, as well as communications involving Zhao, who founded the company in 2017.
In March, the CFTC filed civil charges against Binance, alleging that it failed to implement an effective anti-money laundering program to detect and prevent terrorist financing.
Internally, Binance executives and employees acknowledged that the platform facilitated “potentially illegal activities,” the CFTC alleged.
In February 2019, Lim, Binance’s former compliance officer, received information about the Palestinian militant group Hamas’ transactions on Binance, the CFTC wrote.
Lim, a Singaporean, “explained to a colleague that terrorists usually send ‘small amounts,’ because ‘large amounts constitute money laundering,'” the CFTC said in its March lawsuit.
Zhao, a billionaire born in China and immigrated to Canada at age 12, said “the CFTC’s complaint appears to contain an incomplete recitation of the facts, and we disagree with the characterization of many alleged problems.”
Reporting by Chris Prentice and Jonathan Stempel in New York and David Lawder in Washington; Additional reporting by Tom Wilson and Elizabeth Howcroft in London; Editing by Michelle Price and Lisa Shumaker
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