Binance Founder Pleads Guilty to Violating Money Laundering Rules

Changpeng Zhao, the founder of Binance, the largest cryptocurrency exchange in the world, pleaded guilty to money laundering violations, a stunning blow to the most powerful and influential figure in the global crypto industry.

Binance itself also pleaded guilty and agreed to pay $4.3 billion in fines and restitution to the government, according to federal authorities. Under the agreement, Binance also reached settlements with the Treasury Department and the Commodity Futures Trading Commission, which have also been investigating the company.

As part of his guilty plea, Zhao agreed to pay a $50 million fine and will also step down from his role as CEO of the company. The government is seeking an 18-month prison sentence for Zhao, the maximum suggested under federal guidelines, according to senior Justice Department officials.

Binance, as part of its own plea deal with federal prosecutors, will accept the appointment of a government monitor to oversee the business. Zhao is barred from any involvement in Binance until three years after the monitor is appointed.

Zhao and a representative for Binance entered the guilty pleas in federal court in Seattle. Zhao’s lawyers could not be reached for comment. A Binance spokesperson did not respond to request for comment.

At times, Binance has processed two-thirds of all digital currency trades, making it a vital power broker and intermediary in the crypto world.

Court documents made public Tuesday described a wide-ranging effort by Zhao and other senior Binance employees to evade laws that require financial institutions and their employees to learn their customers’ true identities, avoid doing business with criminals or people barred by economic sanctions, and register any U.S.-based businesses with regulators. Customers from Iran, Cuba and Syria — all of which face sanctions — were able to access the Binance platform. Authorities said that Zhao knew that Binance’s efforts to stop people from the sanctioned countries doing business on the exchange were inadequate. Federal prosecutors specifically charged Binance with conspiring to run an unlicensed money transmitting business, violating federal bank secrecy laws and violating federal sanctions laws.

In addition to the outlawed foreign transactions, Binance did business with firms based in the United States even though it was not supposed to have any such customers on its Binance.com platform. Instead, a different platform — Binance.US, which Zhao also owned — was required to handle the business and abide by the country’s anti-money laundering laws.

This article originally appeared in <a href="https://www.nytimes.com/2023/11/21/technology/binance-changpeng-zhao-pleads-guilty.html">The New York Times</a>.