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Changpeng Zhao, the founder and CEO of Binance, who is also the world's largest cryptocurrency exchange, has stepped down from his position this week and pleaded guilty to breaching US anti-money laundering laws.
Notably, his resignation comes as part of a historic $4.3 billion settlement between Binance and US authorities to resolve a long-running investigation into the company's failure to prevent illicit transactions on its platforms.
The settlement, one of the largest-ever US penalties against a cryptocurrency firm, includes $50 million personally paid by Zhao. According to the Justice Department, Binance violated anti-money laundering and sanctions laws by neglecting to report over 100,000 suspicious transactions potentially linked to terrorist organizations and other sanctioned groups.
"Binance made it easy for criminals to move stolen funds on its exchanges," said US Attorney General Merrick Garland in a statement. "Binance pretended to comply [with the law]."
Changpeng Zhao, commonly known as CZ, founded Binance back in 2017. Under his leadership, the exchange grew rapidly to become the market-leading crypto trading platform globally. However, Binance attracted increasing regulatory attention over the years for its lax compliance controls.
The company temporarily blocked US users in 2019 before relaunching Binance.US, a supposedly fully compliant exchange for American customers. But U.S. authorities now allege Binance and Zhao continued violating anti-money laundering rules even after promising to improve compliance.
Prosecutors are seeking an 18-month prison sentence for Zhao, the maximum under federal guidelines, according to the New York Times. But experts say that even if sentenced, the Binance founder may not spend extensive time behind bars given his wealth and ownership stake in the company.
Despite resigning from Binance, Zhao retains a net worth of over $10 billion, per Forbes estimates. The record-breaking settlement also appears financially survivable for the exchange, which remains operational under new leadership.
"He still has enormous wealth," said attorney Robert Frenchman. "[Zhao] isn't likely to spend too much time in a U.S. jail. He retains his ownership stake in Binance, a company that has now resolved some of its biggest legal issues."
The repercussions from the Binance case mark the latest blow against the cryptocurrency industry, which faces growing pressure to comply with anti-money laundering rules as governments aim to curb illicit uses of digital assets globally.
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