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What does the DOJ indictment against the crypto exchange and Changpeng Zhao reveal?

As we learn of Changpeng Zhao’s departure from Binance, the indictment against him and his crypto exchange has just been published. What does the latter teach us, and what exactly is CZ and his platform accused of?

What does the indictment against Binance and Changpeng Zhao tell us?

While the Wall Street Journal just told us that Changpeng Zhao was leaving his position as CEO of Binance, the largest cryptocurrency exchange in the world in terms of volume traded, the indictment brought by the US Department of Justice has just been revealed. The latter was initially filed on November 14.

First of all, and in order to clarify the questions surrounding the different entities of the CZ empire, it is indeed Binance which is targeted by the complaint, and not its subsidiary Binance.US, although it is cited in the document on multiple occasions.

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Thus, the DOJ accuses Binance and Changpeng Zhao for violating the banking secrecy law (Bank Secrecy Act) for a period from 2017 until at least October 2022. According to the document, Binance would not have implemented a mandatory anti-money laundering programIn addition to having “ violated US economic sanctions » relating to the International Emergency Economic Powers Act (IEEPA).

Overall, it is criticized for Binance and CZ for hiding the activity of their international platform ( in the United States, a territory normally served by Binance.US, the dedicated subsidiary of the exchange.

“The goal of the conspiracy was to allow Binance to operate as a virtual currency exchange and gain market share and profits as quickly as possible. Defendants chose not to comply with U.S. legal and regulatory requirements because they determined that doing so would limit their ability to attract and retain U.S. users. »

Extract from the indictment

More precisely, the document claims that CZ and Binance were widely aware of their activity in the United States, since they were actively monitoring their numbers on site. So, a chart filed by the DOJ shows that in 2017, more than 23% of Binance users were US residents.

Binance accusation overview

Excerpt from the indictment against Binance and Changpeng Zhao

In 2019, Changpeng Zhao also wrote that if Binance had blocked its American customers, the platform “ wouldn’t be as big as it is today ”, before adding that he was “ better to ask for forgiveness than permission “.

Binance to plead guilty to 3 separate chargesincluding knowingly operating, controlling, managing, supervising, directing and owning all or part of an unlicensed money transmission business and 2 other similar counts, in part relating to its illegal operations in Iran.

The agreement between the parties specifies that CZ will not be able to appeal if the sentence awarded to him does not exceed 18 months. At most, Former Binance CEO faces up to 10 years in prison, knowing he pleaded guilty. In parallel, he agreed to pay a $50 million fine personally.

A compliance program tailored to US laws will be put in place, as the DOJ has accused Binance of operating without a proper compliance program.

The price of BNB, Binance’s native token, is down just under 6% following the news.

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