Binance chief executive Changpeng Zhao is stepping down and pleading guilty to breaking US law as part of a settlement with the Department of Justice. Zhao has pleaded guilty to violating anti-money-laundering rules, and the crypto exchange will pay more than $4 billion in fines.
Binance admitted that it had failed to maintain an effective anti-money laundering program, which enabled bad actors, including terrorist organizations and sanctioned regimes, to move money through the platform.
“Binance became the world’s largest cryptocurrency exchange in part because of the crimes it committed—now it is paying one of the largest corporate penalties in U.S. history,” said US Attorney General Merrick Garland
Under Zhao’s management, the DOJ alleges, Binance “caused, according to its own data, at least $890 million in transactions between US users and users Binance identified as Iranians.” The US has imposed strict financial sanctions on Iran. Binance also allowed transactions between US users and counterparts in other sanctioned jurisdictions, including Cuba, Syria and illegally occupied regions of Ukraine, the indictment says.
Zhao also “prioritized Binance’s growth and profits over compliance with US law,” the indictment alleges. He acknowledged the company operated in what he described “grey zone,” but instructed staff that it was “better to ask for forgiveness than permission,” the indictment states.
Richard Teng, currently head of regional markets at Binance, will take over as CEO. Teng was the CEO of Abu Dhabi Global Market, a financial regulator in the UAE. Teng is said to be a popular choice among Binance staff, according to sources.
“Binance is no longer a baby. It is time for me to let it walk and run. I know Binance will continue to grow and excel with the deep bench it has,” Zhao said in a post on X announcing Teng’s appointment as CEO.
“Binance turned a blind eye to its legal obligations in the pursuit of profit. Its willful failures allowed money to flow to terrorists, cybercriminals, and child abusers through its platform,” said US Secretary of the Treasury Janet Yellen. “Today’s historic penalties and monitorship to ensure compliance with U.S. law and regulations mark a milestone for the virtual currency industry.”
In the last year, Zhao had taken to responding to negative headlines on X, formerly Twitter, by posting “4”—a symbol he adopted to dismiss allegations made against the company as baseless FUD (shorthand for fear, uncertainty and doubt). But the DOJ investigation into Binance was an open secret in crypto circles, and Binance insiders say that staff have been anxiously waiting for charges to drop, amid a “general sense of doom.”
Binance is by far the largest cryptocurrency exchange in the world by transaction volume, with around 40 percent of global market share, and is a major part of the infrastructure underpinning the crypto business.
The company also faces two civil lawsuits in the US, brought by the Commodities and Futures Trading Commission (CFTC) and Securities and Exchange Commission (SEC), alleging, among other things, commingling of customer assets, anti-money-laundering violations, and artificially inflating trading volumes.