By John Ikani
Changpeng “CZ” Zhao has resigned as Binance’s CEO as part of a substantial $4 billion settlement with U.S. authorities over the cryptocurrency exchange’s alleged involvement in anti-money laundering violations and sanctions violations.
The move follows extensive investigations by the Department of Justice and others.
“I made mistakes, and I must take responsibility,” Zhao acknowledged in a post on X, the platform previously known as Twitter. Binance, in a press statement, admitted to lacking adequate compliance controls during its initial launch, recognizing the need for improvement.
Although Zhao steps down as CEO, he remains Binance’s majority shareholder and will serve as a resource for consultation on historical aspects of the business.
Richard Teng, a Binance executive, is set to assume the CEO position.
As part of the settlement, Zhao pleaded guilty to anti-money laundering and sanctions violations in federal court.
Binance also settled charges with the Department of Justice and the Commodities Futures Trading Commission, the Financial Crimes Enforcement Network (FinCEN), and the Office of Foreign Assets Control (OFAC).
The settlement includes a $3.4 billion penalty to FinCEN, a $968 million penalty to OFAC, and a five-year monitorship allowing the Treasury Department access to Binance’s books and records.
Merrick Garland, the U.S. Attorney General, emphasized the significance of the penalties, stating, “Because of the crimes committed, Binance became the largest cryptocurrency exchange in the world.”
Treasury Secretary Janet Yellen accused Binance of turning a blind eye to legal obligations, allowing funds to reach terrorists, cybercriminals, and child abusers.
The Securities and Exchange Commission (SEC) had previously charged Binance and Zhao for operating an unregistered exchange and misleading investors.
The case is ongoing, and SEC Chair Gary Gensler alleged an extensive web of deception, conflicts of interest, and evasion of the law.
Brian Armstrong, CEO of Binance’s U.S. competitor Coinbase, viewed the developments as an opportunity for the industry to embark on a new chapter.
He expressed hope that actions against Binance would catalyze regulatory clarity.