Just weeks after former crypto billionaire Sam Bankman-Fried was convicted on seven counts, another titan of the industry is losing his throne.
Binance CEO Changpeng Zhao pleaded guilty on Tuesday to “violating and causing a financial institution to violate” the Bank Secrecy Act, which requires financial institutions to help weed out money laundering, according to documents filed in Seattle federal court. Zhao, known as CZ, agreed to pay a $50 million fine and resign from the company. It wasn’t immediately clear what sentence he may face.
Attorney General Merrick Garland said during a press conference that Zhao “willfully violated federal law that guards against money laundering and terrorist financing.”
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CZ announced in a tweet that he will cede his position as chief executive, but, according to The Wall Street Journal, will get to keep his majority stake in the business.
Binance itself admitted to money laundering and agreed to pay a fine of around $1.8 billion, and an additional $2.51 billion in an order of forfeiture to settle charges of conspiracy, violating the International Emergency Economic Powers Act, and operating an unlicensed money transfer business.
Federal officials have spent months investigating the crypto exchange, which is the largest in the world.
One of those violations, the court papers said, involved “knowingly and willingly” offering services to Iran, “without first having obtained the required authorization or license from the U.S. Department of the Treasury.” The company was also accused of operating an “unlicensed money transmitting business,” among other violations.
Prior to Bankman-Fried’s arrest earlier this year, he accused CZ of precipitating the collapse of his crypto firm, FTX, by declaring on Twitter that FTX’s crypto tokens were highly risky. When FTX customers then tried to withdraw their funds en masse, it quickly became clear that the company didn’t have enough capital. Later, it emerged that Bankman-Fried had secretly transferred customer assets to another company he owned to make venture capital investments and pay off debts.
Around the time of FTX’s implosion, CZ offered to acquire the company, thereby positioning himself as a last-minute savior. But he backed out soon after, a move that seemed to seal the business’ fate.
CZ was released from custody on a $175 million bond and is set to be sentenced in February.
