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| (Changpeng Zhao) |
Recently, Binance's chief, Changpeng Zhao, stepped down and pleaded guilty to breaching U.S. anti-money laundering laws as part of a monumental $4.3 billion settlement, marking the resolution of a lengthy investigation into the world's largest cryptocurrency exchange, as revealed by prosecutors on Tuesday.
The deal, encompassing a personal payment of $50 million by Zhao, has been described by prosecutors as one of the most significant corporate penalties in U.S. history. However, despite the extensive settlement, legal experts note that Zhao is set to retain his substantial wealth and maintain ownership of Binance, the exchange he founded in 2017.
The allegations against Binance include violations of U.S. anti-money laundering and sanctions laws, alongside a failure to report over 100,000 suspicious transactions involving organizations designated as terrorist groups by the United States, including Hamas, al Qaeda, and the Islamic State of Iraq and Syria. These charges span both criminal and civil implications, some of which were initially reported by Reuters in a series of articles back in 2022.
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The Justice Department, in collaboration with the Commodity Futures Trading Commission (CFTC) and the Treasury Department, has negotiated this settlement while seeking an 18-month prison sentence for Zhao, the maximum suggested under federal guidelines, as reported by the New York Times. Furthermore, the former chief compliance officer of Binance, Samuel Lim, has been charged by the CFTC.
In the settlement, Binance will pay $1.81 billion within 15 months, along with an additional $2.51 billion in forfeiture. Zhao, a billionaire, entered a guilty plea in a Seattle court on the afternoon of the announcement.
After the settlement was disclosed, Zhao announced his resignation as CEO of Binance on social media, admitting the emotional challenge of letting go but acknowledging its necessity. Richard Teng, a longstanding Binance executive, has been appointed to assume the role of CEO, signaling a notable transition for the crypto industry giant.
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Amidst this development, Binance issued a statement acknowledging its responsibility for historical compliance violations and expressing a commitment to turning the page. Additionally, Teng emphasized the focus on reassuring users regarding the company's financial strength, security, and safety.
While the magnitude of the fine is substantial, legal experts suggest that it may still be manageable for Binance, raising questions about Zhao's retention of a stake in the company and its potential impact on the organization moving forward. Despite the severity of the violations, Zhao's ability to preserve his stake in Binance may allow him to maintain influence within the company, a point noted by Vanderbilt University law professor Yesha Yadav.
As per Forbes, Zhao's net worth stands at $10.2 billion, making it clear why his retaining of ownership and wealth has been a matter of scrutiny and consideration after the settlement. While the severity of the violations and the players involved should have put Zhao in a precarious position, legal experts note that he emerges from this ordeal relatively unscathed, retaining significant wealth and ownership in Binance.
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-THE NEW YORK TIME- "Binance Founder Pleads Guilty to Violating Money Laundering Rules"
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