Binance CEO Changpeng Zhao resigns amidst $4.3B settlement in landmark legal case

In a significant development, officials from the United States Department of Justice have revealed that Changpeng "CZ" Zhao, the CEO of Binance, has pleaded guilty to a felony charge as part of a comprehensive settlement encompassing both criminal and civil cases involving the cryptocurrency exchange.

This groundbreaking announcement came during a press conference on 21 November, where Attorney General Merrick Garland shared the details of the settlement.

Attorney General Merrick B. Garland Delivers Remarks Announcing Binance and CEO Guilty Pleas to Federal Charges in $4B Resolutionhttps://t.co/L1HYoDKagQ

— U.S. Department of Justice (@TheJusticeDept) November 21, 2023

Criminal allegations & settlement terms

Garland emphasised that Binance's policies facilitated the movement of ‘stolen funds’ by individuals engaged in illicit activities through the exchange. He accused Binance of merely pretending to comply with U.S. federal laws, allowing certain users with ties to illicit funds access to the platform.

As part of the $ 4.3 billion settlement, Binance and CZ will address civil regulatory enforcement actions from entities such as the U.S. Treasury and the Commodity Futures Trading Commission (CFTC).

The exchange will be subjected to monitoring, reporting requirements, and the filing of suspicious activity reports for previous transactions.

We’re pleased to share we’ve reached resolution with several US agencies related to their investigations.

This allows us to turn the page on a challenging yet transformative chapter of learning that has helped us become stronger, safer, and an even more secure platform.

— Binance (@binance) November 21, 2023

Financial penalties & leadership changes

Treasury Secretary Janet Yellen outlined the financial repercussions, stating that Binance would pay over $3.4 billion in penalties to the Financial Crimes Enforcement Network and approximately $1 billion to the Treasury's Office of Foreign Assets Control.

CFTC Chair Rostin Behnam detailed the civil penalties, with Binance paying $2.7 billion and CZ contributing $150 million, accompanied by a $1.5 million payment from former compliance chief Samuel Lin.

In response to these developments, CZ announced his resignation as CEO, with Richard Teng taking on the leadership role.

Binance's response & ongoing legal challenges

In a blog post on 21 November, Binance expressed its satisfaction with resolving with U.S. authorities, asserting its unwavering commitment to user security and safety. Despite this settlement, the exchange still faces a pending civil case with the U.S. Securities and Exchange Commission, focusing on securities law violations filed in June.

This recent development marks a critical chapter in the evolving landscape of cryptocurrency regulation and enforcement.