Founder of crypto exchange Binance has to go after investigation
The world's largest cryptocurrency exchange Binance has admitted to violating money laundering laws in the US and will pay a billion-euro fine. Founder and CEO Changpeng Zhao must relinquish all positions at the company and Binance will be placed under supervision for three years. For the US government, the result of its year-long investigation is a success in its efforts to subject the business with cryptocurrencies such as Bitcoin to standard financial market regulation.
Binance will face fines totaling around 4.3 billion dollars (3.95 billion euros), according to court documents published on Tuesday. Zhao will also personally pay 50 million dollars. According to the guilty plea, he is not allowed to hold any positions at Binance during the three-year supervision period.
Today, I stepped down as CEO of Binance. Admittedly, it was not easy to let go emotionally. But I know it is the right thing to do. I made mistakes, and I must take responsibility. This is best for our community, for Binance, and for myself.
Binance is no longer a baby. It is…
— CZ 🔶 Binance (@cz_binance) November 21, 2023
Zhao himself wrote on the online platform X that he no longer sees himself as the head of a start-up in the future. Richard Teng, who was previously responsible for local markets, will take over as head of Binance. At the same time, Zhao appears to be able to retain his majority stake in Binance. In the current billionaire ranking of the Bloomberg financial service, he is in 68th place with an estimated fortune of 23.5 billion dollars.
Other market participants should be deterred
After years of investigations, the US judiciary accused Binance and Zhao of circumventing money laundering and sanctions laws. Despite having millions of customers in the US, the operators of the crypto exchange had not set up the prescribed controls. This made questionable money flows possible, including around 900 million dollars between the USA and Iran, which is subject to sanctions. According to the allegations of the public prosecutor's office, Zhao instructed Binance employees to communicate with US customers by telephone in order to leave no traces.
The prosecutor responsible, Nicole Argentieri, hopes that this will send a signal to other market participants to deter similar practices: "If they serve US customers, they must comply with US laws." US Attorney General Merrick Garland pointed out that Binance had also become the world's largest trading venue for cryptocurrencies due to the violations of the law.
Around a year ago, Binance's major competitor FTX collapsed and its founder Sam Bankman-Fried was finally found guilty of fraud a few weeks ago in a sensational trial in New York. US investigators had convinced the jury that Bankman-Fried was secretly diverting client money to his own hedge fund.
Zhao emphasized that US authorities did not accuse Binance of misappropriating client funds or manipulating markets.
Binance's fine for violating money laundering laws in the US will significantly impact its finances, potentially affecting its currency reserves and stock exchange performance. The investigation and subsequent penalty serve as a reminder for other market participants to adhere to financial market regulations, especially when dealing with cryptocurrencies.
In light of the penalty and the relinquishment of his positions, Changpeng Zhao's personal wealth, as highlighted by Bloomberg's billionaire ranking, may shift due to changes in his stake in Binance's currency or stock exchanges.
Source: www.dpa.com
