Author: Joy, PANews
The US iron fist's regulatory boots against Binance have finally landed! The US$4.3 billion fine paid became the largest fine in the history of the US Treasury Department.
In the early morning of November 22, Beijing time, the Department of Justice held a press conference to announce the Binance settlement. U.S. Attorney General Merrick Garland, U.S. Treasury Secretary Janet Yellen, Deputy Attorney General Lisa Monaco, and CFTC Chairman Rostin Behnam attended.
Binance agrees to criminal charges, pays $4.3 billion fine
Binance was charged with three counts, including money laundering violations, conspiracy to conduct an unlicensed money transmitting business, and violations of U.S. sanctions.
The charges facing Binance center on anti-money laundering violations.
The U.S. Treasury Department said Binance’s violations included failing to prevent and report suspicious transactions with terrorists, including Hamas, Palestinian Islamic Jihad, al-Qaeda and the Islamic State in Iraq and Syria. Court documents show that Binance allowed at least 1.1 million related transactions, totaling more than $898 million, involving Iranian customers.
U.S. Treasury Secretary Janet Yellen said in a press release, “Binance turned a blind eye to its legal obligations in the pursuit of profits. Binance chose to prioritize growth rather than complying with U.S. legal requirements. Binance completed billions of dollars in transactions without collecting necessary information from customers or monitoring transactions.”
U.S. Attorney General Merrick B. Garland said that the Binance platform is crowded with criminals from all over the world who use Binance to transfer various illegal funds and other criminal proceeds through cryptocurrencies.
Binance will pay a criminal fine of $1.8 billion and forfeit $2.5 billion. The $4.3 billion fine includes $3.4 billion paid to the U.S. Treasury Department's Financial Crimes Enforcement Network and $968 million paid to the Treasury Department's Sanctions Department. This fine also became the largest fine in the history of the U.S. Treasury Department.
In addition, Zhao Changpeng agreed to resign and pay a $50 million fine. Zhao Changpeng will also face up to 10 years in prison. His lawyer said in court that his sentencing will be postponed for 6 months. The judge said at the plea hearing that Zhao's settlement agreement includes giving up the right to appeal, provided that his sentence does not exceed 18 months. Bloomberg said that this makes him hopeful of being spared the severe punishment faced by people like SBF. The U.S. Department of Justice has not yet made a final decision on the length of his imprisonment. District Judge Brian A. Tsuchida is scheduled to sentence CZ on February 23, 2024.
According to the terms of its guilty plea, in addition to a fine, Binance will have to appoint an independent compliance monitor for a three-year term and report its compliance work to the U.S. government. Zhao Changpeng is prohibited from "participating in any operation or management of Binance now or in the future," a ban that will end three years after the monitor is appointed. It should be noted that the Treasury Department's announcement stated that it will retain access to Binance's books, records, and systems for five years.
In addition, as part of the plea agreement, Binance will "completely withdraw" from the U.S. market. The independent exchange named Binance.US is the operating name of Binance's U.S. subsidiary BAM Trading Services, a registered money service business. Therefore, BinanceUS is not affected by Binance's withdrawal and will continue to operate in the United States.
If Binance fails to meet these obligations, it could face additional significant penalties, including a $150 million suspended penalty, which the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) would collect if Binance fails to comply with required compliance commitments and regulatory terms.
Richard Teng will take over as Binance CEO, CZ may engage in passive investment after "retirement"
Zhao Changpeng posted a long article on Twitter saying, "I have resigned from the position of CEO of Binance. It is undeniable that it is not easy to let go emotionally. But I know it is the right choice. I made mistakes and I must take responsibility. This is the best for our community, Binance, and myself. Binance is no longer a baby, it's time to let it run on its own. I know Binance will continue to grow."
At the same time, I am pleased to announce that Richard Teng, former global head of regional markets at Binance, will be appointed as the new CEO of Binance. Richard has more than 30 years of experience in financial services and regulation, and he will lead the company through the next period of growth. He will ensure that Binance achieves the next stage of security, transparency, compliance, and growth. Prior to joining Binance, Richard served as CEO of the Financial Services Regulatory Authority of Abu Dhabi Global Market (ADGM), Chief Regulatory Officer of Singapore Exchange (SGX), and Director of Corporate Finance of the Monetary Authority of Singapore. (Related reading: Who is Richard Teng, who is speculated to be Zhao Changpeng's successor and is responsible for all markets outside of Binance in the United States?)
As a shareholder and former CEO, I will be available to provide necessary consultation to the team in accordance with the framework established in the settlement agreement with US regulators. Regarding future plans, first of all, I will take a break for a while. In the past six and a half years, I have not had a real day of rest. After that, I may do some passive investments and become a minority shareholder in startups in the fields of blockchain, Web3, DeFi, artificial intelligence, and biotechnology. I am very happy that I finally have more time to study DeFi.
I can't imagine myself being the CEO of a startup again. I might be willing to mentor a few entrepreneurs privately in the future, at least to tell them what not to do.
Richard Teng, the new CEO of Binance, also tweeted, "It is a great honor to serve as the CEO of Binance. We operate the world's largest cryptocurrency exchange with 150 million users and thousands of employees. With the support of Changpeng Zhao and the leadership team, I accepted this position and will continue to meet the expectations of stakeholders while achieving our core mission. Future work focuses will be: 1) Keep users confident in the company's financial strength and security; 2) Work with regulators to maintain high standards globally, promote innovation, and provide important consumer protections; 3) Work with partners to promote the development and adoption of Web3."
Regulators confirm that Binance did not misappropriate user funds and did not engage in market manipulation
In the accusation, Binance was not mentioned to have misappropriated user funds or manipulated the market, which also confirmed its previous commitment to user funds.
CZ also mentioned on Twitter, "I am proud to point out that in the settlement with US regulators, they did not accuse Binance of misappropriating any user funds, nor did they accuse Binance of engaging in any market manipulation. Funds remain safe."
Binance co-founder He Yi tweeted that US regulators did not accuse Binance of misappropriating user funds or engaging in market manipulation. Binance will further strengthen compliance and continue to build.
Binance officials also released a report saying, “Today we are pleased to inform that we have reached a solution with the U.S. Department of Justice, the Commodity Futures Trading Commission, the Office of Foreign Assets Control, and the Financial Crimes Enforcement Network regarding their investigations into historical registration, compliance, and sanctions issues. These solutions acknowledge our company’s responsibility for historical violations of criminal compliance and allow our company to open a new chapter of learning and growth that is both challenging and transformational. It is worth noting that in our settlement with U.S. agencies, they did not accuse Binance of misappropriating any user funds, nor did they accuse Binance of engaging in any market manipulation.”
