Changpeng Zhao, the founder and CEO of Binance, the world’s largest cryptocurrency exchange, has stepped down from his position following a landmark settlement with United States regulatory agencies. This development comes in the wake of extensive investigations led by the Department of Justice (DOJ) and other agencies into allegations of anti-money laundering and sanctions violations by Binance.
In a statement, Zhao acknowledged his role in the company’s past compliance issues. He acknowledged that he “made mistakes” and must “take responsibility,” emphasizing that this decision was in the best interest of the community, Binance and himself. Binance, in its press release, admitted to initial inadequacies in its compliance controls, a factor that contributed to its rapid growth and subsequent regulatory scrutiny.
Zhao’s resignation is part of a broader agreement that includes Binance paying one of the largest corporate penalties in U.S. history, totaling $4.3 billion. The settlement, announced on Tuesday, addresses charges brought by the DOJ, the Commodities Futures Trading Commission, the Financial Crimes Enforcement Network (FinCEN), and the Office of Foreign Assets Control (OFAC). Specifically, the settlement includes a $3.4 billion penalty to FinCEN and $968 million to OFAC.
As part of the settlement, Zhao appeared in federal court in Seattle, pleading guilty to charges of anti-money laundering and sanctions violations. The agreement also includes a five-year monitorship, granting the Treasury Department access to Binance’s books and records.
Richard Teng, a Binance executive, has been confirmed as Zhao’s successor. Despite stepping down as CEO, Zhao will remain the majority shareholder and continue to serve as a consultant on historical aspects of the business.
Reacting to this significant change, Justin Sun, founder of Tron, expressed his regards to Richard Teng on becoming the new CEO of Binance. Meanwhile, Brian Armstrong, CEO of Coinbase, Binance’s U.S. competitor, viewed the development as a potential turning point for the industry, hoping for clearer regulatory frameworks in the future.
As of now, Zhao’s legal situation includes a $175 million personal recognizance bond and a $50 million fine as part of his plea agreement. He is barred from breaking the law and must adhere to standard bond release conditions, including restrictions on travel. His sentencing is scheduled for February 23, 2024.
