In a landmark development, the United States Department of Justice (DOJ) has reached a momentous settlement with Binance, the world’s largest cryptocurrency exchange based on trading volume. Under the terms of this agreement, Binance has agreed to pay a substantial sum of $4.3 billion to resolve issues raised by the DOJ. This groundbreaking announcement was made during a press briefing on cryptocurrency enforcement, held at 3:36 p.m. Eastern Time (ET) on Tuesday.
The settlement follows an extensive investigation by the DOJ into Binance’s activities, particularly related to anti-money laundering (AML) and sanctions regulations. Although the investigation had been previously reported, no significant developments had occurred until now.
The press conference featured key figures such as Attorney General Merrick Garland, Secretary of the Treasury Janet Yellen, Deputy Attorney General Lisa Monaco, and Chairman Rostin Behnam of the Commodity Futures Trading Commission (CFTC). Attorney General Garland delivered a resounding message, stating, “Binance became the world’s largest cryptocurrency exchange in part because of the crimes it committed – now it is paying one of the largest corporate penalties in U.S. history.”
This comprehensive agreement between Binance, the DOJ, Treasury, and the CFTC marks the conclusion of the ongoing investigation. Notably, Binance’s Chief Executive, Changpeng Zhao (CZ), has chosen to resign and has entered a guilty plea in a Seattle courtroom. CZ’s plea bargain mirrors that of former Bitmex CEO Arthur Hayes, who admitted to violating the Bank Secrecy Act (BSA).
According to recently unsealed court documents, CZ and several other high-ranking Binance employees “knowingly failed to register as a money services business” as early as August 2017. Moreover, they “willfully violated the Bank Secrecy Act by failing to implement and maintain an effective anti-money laundering (AML) program” and “willfully caused violations of U.S. economic sanctions issued pursuant to the International Emergency Economic Powers Act.”
As part of the settlement, Binance has agreed to a total financial penalty of $4.316 billion, comprising the forfeiture of over $2.5 billion and the payment of a criminal fine totaling approximately $1.8 billion. Additionally, Binance will be required to appoint an independent compliance monitor for three years, tasked with enhancing the exchange’s anti-money laundering (AML) and sanctions compliance programs. Binance has also successfully reached settlements with the CFTC, FinCEN, and OFAC, with around $1.8 billion allocated toward fulfilling these agreements.
It is essential to note that the settlement takes into consideration Binance’s failure to voluntarily disclose its misconduct and its delayed cooperation with the investigation, resulting in a 20% reduction in the penalty. CZ, in his admission of guilt, acknowledged that Binance had served U.S. users without proper registration, prioritizing the company’s growth over legal compliance and subsequently engaging in transactions that violated U.S. sanctions.
CZ expressed his commitment to the Binance community and disclosed that he would be stepping down from his leadership role. Richard Teng, formerly Binance’s Global Head of Regional Markets, is set to assume the leadership position as the exchange moves forward. CZ acknowledged his mistakes, stating, “I made mistakes, and I must take responsibility. This is best for our community, for Binance, and for myself.”