Changpeng Zhao Pleads Guilty And Steps Down As Binance CEO
Binance founder and CEO Changpeng Zhao pleaded guilty to violating anti-money laundering rules and agreed to step down as CEO. What happened, and how did the markets react to this news?
Case Settlement
Last Tuesday, Changpeng Zhao and Binance pleaded guilty to federal charges. After a lengthy case against Binance, both sides agreed to settle the case. Binance has agreed to pay $4.3 billion in fines and other penalties. Zhao agreed to pay $200 million and step down as CEO of Binance.
The company pleaded guilty to anti-money laundering violations and other illegal conduct, including sanctions violations. This marked the largest corporate fine in history, including fines of the company's management.
The investigation into Binance had been ongoing for several years. As a result, US authorities found that the cryptocurrency exchange allowed unscrupulous market participants to carry out illegal activities on its platform, including money laundering and sponsoring terrorism. Binance allowed more than 100,000 transactions involving illegal activity, as well as more than 1.5 million asset transactions that violated U.S. sanctions. Filings released Tuesday indicate that the exchange used crypto mixers to launder money. In addition, the government averred that Binance deliberately failed to register as a money services company, willfully violating the Bank Secrecy Act.
Changpeng Zhao admitted that he failed to establish sound anti-money laundering practices. He faces up to 10 years in prison, but the final sentence will likely be much lower and could be as little as 18 months. This settlement allows Binance to continue to operate.
Merrick Garland, a federal prosecutor, said Binance's success came in part because of the crimes it committed. Treasury Secretary Janet Yellen said that in the pursuit of wealth, Binance forgot its legal obligations.
The settlement of the case was made possible by the coordinated action of a range of government agencies, including the Department of Justice, the Financial Crimes Enforcement Network (FinCEN), the Office of Foreign Assets Control (OFAC) and the Commodity Futures Trading Commission. Meanwhile, U.S. authorities said the case of Changpeng Zhao and Binance, as well as the recent Sam Bankman-Fried trial, will send a message to other unscrupulous cryptocurrency market participants.
Binance's new CEO
As soon as news of the case settlement leaked online, Changpeng Zhao addressed X, where he confirmed his resignation as CEO of Binance. Zhao also admitted his guilt and willingness to face the consequences for the sake of Binance's future.
Today, I stepped down as CEO of Binance. Admittedly, it was not easy to let go emotionally. But I know it is the right thing to do. I made mistakes, and I must take responsibility. This is best for our community, for Binance, and for myself.
— CZ 🔶 Binance (@cz_binance) November 21, 2023
Binance is no longer a baby. It is…
The company also released a statement, indicating that it wasn't always perfect. The statement said that Binance was growing rapidly and made bad decisions. However, the company has always strived to protect users, so it takes responsibility for what happened.
Zhao will be succeeded by Richard Teng, who previously served as global head of regional markets at Binance. Teng was also previously CEO of Abu Dhabi Global Market, a financial services regulator, and served as director of corporate finance at the Monetary Authority of Singapore.
Zhao also described Teng as a highly qualified executive and that he will be the one to lead Binance in its next growth period. Zhao added that Teng will oversee security, transparency, and compliance.
Richard Teng also said in his post that he will focus on three key aspects: ensuring that users have confidence in the company, working with regulators, and working with partners to develop the Web3 space.
It is an honour and with the deepest humility that I step into the role of Binance’s new CEO.
— Richard Teng (@_RichardTeng) November 21, 2023
We operate the world's largest cryptocurrency exchange by volume. The trust placed on us by our 150m users and thousands of employees is a responsibility that I take seriously and hold…
Storm on the market
The situation around Binance and Changpeng Zhao caused a lot of volatility in the cryptocurrency market. The price of Bitcoin fell to $35,745 after the judgment. Currently, the major cryptocurrency is trading at $36,681.
These price fluctuations are an attempt by market participants to make sense of what happened. The price of BNB soared to its 5-month high before the press conference, but soon rebounded and lost most of the gains.
Glassnode data also shows that Binance users are in no hurry to leave the platform.
Cover Image Source & Copyright: Web Summit / Cryptonica / CC BY 2.0
Changpeng Zhao Sam Bankman-Fried Binance Bitstamp
