Binance Agrees to Pay $4.3 Billion Plea Deal, Takes Responsibility for Past Violations, What Now For CZ?

Binance Holdings Ltd., the world’s largest cryptocurrency exchange, has secured a judge’s approval for a historic $4.3 billion plea deal with the United States Department of Justice. This significant settlement comes as Binance acknowledges its role in past violations and actions during the leadership of former CEO Changpeng Zhao.

Anti-Money Laundering Lapses

The plea deal, which was initially announced in November, resolves a lengthy investigation that uncovered Binance’s failure to report over 100,000 suspicious transactions, including those involving designated terrorist groups like Hamas, al Qaeda, and ISIS. 

Additionally, Binance was found to have supported the sale of child sexual abuse materials and ranked among the major recipients of ransomware proceeds.

Prosecutors revealed that Binance lacked essential components of an anti-money laundering program, such as know-your-customer (KYC) requirements, and failed to file suspicious activity reports. This allowed illicit actors to utilize Binance for transactions involving mixing services and fund transfers.

Binance Admits It’s Fault

In a courtroom statement, Binance’s Deputy General Counsel, Josh Eaton, expressed that the cryptocurrency exchange “accepts full responsibility for its past and for the reasons we’re sitting here today.” 

Eaton acknowledged the company’s commitment to enhancing its KYC and anti-money laundering compliance, emphasizing a dedication to setting industry standards for compliance, security, and transparency.

“We look forward in the coming months to continuing to build on our efforts to set the industry standard for compliance, security, and transparency,” said Eaton. “We are pleased to put this matter behind us as we continue on our path of being the most trusted and secure digital asset exchange in the world.”

Terms of the Plea Deal

As part of the plea agreement, Binance will forfeit $2.5 billion and pay a criminal fine of $1.8 billion, totaling a record financial penalty of $4.3 billion. The agreement also mandates compliance monitoring for three years by an independent firm, yet to be appointed, and requires Binance to enhance its anti-money laundering and sanctions compliance programs.

Binance has separately reached agreements with the CFTC, FinCEN, and OFAC, with approximately $1.8 billion credited toward those resolutions.

CZ Await For Sentencing 

Changpeng Zhao, popularly known as CZ, awaits a sentencing hearing scheduled for April 30. Having pleaded guilty to violating the Bank Secrecy Act and resigning from his position as Binance CEO in November, Zhao faces a potential prison term of up to 18 months under federal guidelines. However, U.S. prosecutors may argue for a longer sentence, up to 10 years.

Richard Teng, Binance’s former Global Head of Regional Markets, assumed the role of CEO in November following Zhao’s resignation.

Meanwhile, Binance’s settlement marks a turning point, signaling efforts to address past issues and rebuild trust in the cryptocurrency space.