Breaking: Binance Chief Resigns Over Money-Laundering Scandal

Money-laundering scandal forces Binance chief to step down

"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 US history," said Attorney General Merrick Garland in a statement.

The Department of Justice stated that Binance's guilty plea is part of a coordinated effort with the Treasury Department's Financial Crimes Enforcement Network and the Office of Foreign Assets Control (OFAC).

According to the Department of Justice, Zhao pleaded guilty to failing to maintain an effective anti-money laundering programme and resigned as CEO.

Zhao, a Canadian who lives in the United States, submitted his plea in person in the United States, according to Garland.

According to court filings, Zhao agreed to pay a $50 million fine as part of his plea deal.

Binance's agreements with Treasury Department agencies include a $3.4 billion civil money penalty and a $968 million penalty involving OFAC. These are the largest settlements in the agencies' history.

"Binance turned a blind eye to its legal obligations in the pursuit of profit," said Treasury Secretary Janet Yellen in a statement.

"Its willful failures allowed money to flow to terrorists, cybercriminals and child abusers through its platform."

Binance "deliberately undermined its own sanctions monitoring controls," she said, allowing over 1.5 million virtual currency trades that violated US sanctions and failing to notify suspicious activities.

Yellen called the sanctions and Binance's five-year monitorship a "milestone for the virtual currency industry."

Suspicious activity

According to the Treasury, Binance's offences included failing to block and report transactions with groups such as the Islamic State of Iraq and Syria, as well as matching trades between US users and those in sanctioned jurisdictions such as Iran and North Korea.

Moving forward, Binance must file mandatory suspicious activity reports, in addition to examining historical transactions to report such conduct to authorities, according to Garland.

"This will advance our criminal investigations into malicious cyber activity and terrorism fundraising, including the use of cryptocurrency exchanges to support groups such as Hamas," he went on to say.

Binance was founded in 2017 and quickly dominated the cryptocurrency trading market, making Zhao a billionaire.

Binance operates cryptocurrency exchanges and other services all over the world, but it has taken a significant hit since the crypto markets crashed and regulators began investigating the legality of its operations.

Zhao, widely regarded as the archrival of disgraced FTX founder Sam Bankman-Fried, is expected to be sentenced at a later date.

Zhao is currently restricted from operating Binance's company as a result of the agreement.

'Misguided decisions'

Binance said in a statement that it "made misguided decisions along the way" as it grew swiftly in an industry in the "early stages of regulation."

"Today, Binance takes responsibility for this past chapter," according to the statement.

The corporation also stated that it did not have enough compliance controls at first and that it is attempting to restructure. Richard Teng, the company's former global head of regional markets, will succeed Zhao as CEO.

Zhao stated in a separate social media declaration, "I made mistakes, and I must accept responsibility."

The latest agreement excludes the company's dealings with the Securities and Exchange Commission, another regulator, which filed a slew of accusations against Binance in June, alleging that it allowed US people to trade even though it was not registered as a securities exchange in the country.

The SEC also claims that the business misappropriated consumer monies.

While Binance was started in China, Zhao relocated its operations to other places across the world following Beijing's crackdown on the cryptocurrency sector.

The volatile business soared in 2021, thanks to a slew of complicated products and celebrity endorsements, propelling it to a valuation of more than $3 trillion the previous year.

However, a series of scandals, including the collapse of the FTX exchange and criminal charges against its executives, caused public trust to dwindle and investors to withdraw their funds.