CZ resigns as Binance CEO & pleads guilty to money laundering charges

The founder and CEO of Binance, Changpeng Zhao, also known as "CZ," is resigning and entering a guilty plea to Money Laundering and many charges brought by the Department of Justice and other US government agencies. On Tuesday, he showed up to submit a plea in a federal court in Seattle.

Zhao announced in a post on X on Tuesday afternoon that Richard Teng, the exchange's new CEO, will be the former global head of regional markets at Binance.

Teng has held a number of senior positions, including CEO of the Financial Services Regulatory Authority at Abu Dhabi Global Market. Zhao responded to his resignation by saying:

"I made mistakes, and I must take responsibility," and that "it is the right thing to do." Zhao stated he will be "available to the team to consult as needed" and that he will continue to be a stakeholder.

Binance, the biggest cryptocurrency exchange in the world, has also consented to pay the DOJ roughly $4.3 billion to end its investigations, the department announced in a news release on Tuesday.
Binance has also reached agreements with the Financial Crimes Enforcement Network (FinCEN) of the Department of Treasury, the Office of Foreign Assets Control (OFAC), and the Commodity Futures Trading Commission (CFTC) as part of its guilty plea. The company will credit approximately $1.8 billion towards those resolutions.

According to the DOJ announcement, the cryptocurrency exchange "admits it engaged in anti-money laundering, unlicensed money transmitting, and sanctions violations," referring to it as the "largest corporate resolution" that includes an executive facing criminal charges. Zhao entered a guilty plea for neglecting to keep up an anti-money laundering initiative. U.S. Attorney General Merrick Garland stated in a statement:

"The message here should be clear: using new technology to break the law does not make you a disruptor, it makes you a criminal."

According to a filing on the accusations, Binance, Zhao, and other connected parties "knowingly failed to register as a money services business" and broke the Bank Secrecy Act by neglecting to put in place an anti-money laundering programme. It went on to say that the respective parties disregarded American laws and broke U.S. economic sanctions "in a deliberate and calculated effort to profit from the U.S. market."

According to CFTC Chairman Rostin Behnam, the cryptocurrency exchange received trading fees from US consumers totaling around $1.35 billion. Zhao stressed the exchange's expansion there over adhering to US law, telling Binance staff that it was "better to ask for forgiveness than permission," according to court filings. Secretary of Treasury Janet Yellen stated in the statement that:

"Any institution, wherever located, that wants to reap the benefits of the U.S. financial system must also play by the rules that keep us all safe from terrorists, foreign adversaries, and crime or face the consequences."

This past year, Binance caught media attention for a variety of reasons, including Zhao's remarks that contributed in the demise of FTX, one of its primary competitors. Due to a "hostile and uncertain regulatory climate," its American sister company Binance.US cancelled its $1.3 billion agreement to purchase the assets of cryptocurrency broker Voyager Digital in April.

The U.S. Securities and Exchange Commission accused Zhao and the exchange of lying to regulators about their operations, and the agency filed 13 counts against the defendants in the federal case. More than five months have passed since the DOJ brought allegations against Binance. According to the SEC filing, Binance and Zhao were "intimately involved" in overseeing the trading entity's business operations and offering cryptocurrency-related services to the Binance.US platform, which asserts its independence as an exchange.

According to a separate filing dated Monday, Zhao's plea deal states that he won't make any statements “contradicting his acceptance of responsibility” and that he will abide by the court's request that the CFTC be fined $50 million.

Regarding Binance's plea deal, the company said in its Monday filing that it will accept Zhao's resignation and forbid him "from any present or future involvement in operating" the company starting from the moment the plea deal is accepted and ending three years after the day a monitor is appointed. During those three years, the business will also "maintain and enhance" its compliance programme and designate an impartial compliance monitor.