Binance Holdings, the world’s biggest cryptocurrency exchange, and its founder-cum-chief executive Changpeng Zhao have pled guilty to criminal charges filed by the U.S. Justice Department. The company admitted to violating anti-money laundering laws, failing to register as a money-transmitting business, and facilitating transactions in sanctioned countries, including Iran, Syria, and Cuba.

Binance will pay $4.3bn in fines to resolve the investigations, marking the biggest-ever penalty in the cryptocurrency sector and one of the largest corporate fines in U.S. history.

Zhao personally pled guilty to failing to maintain an effective anti-money laundering (AML) program at Binance. He has resigned from the exchange he founded in 2017 and agreed to pay a $50mn fine.

As part of the settlement, Zhao is allowed to keep his majority ownership in Binance. However, he’s barred from any corporate involvement with the exchange for three years. He has been replaced as chief executive by Richard Teng, a senior executive who joined Binance in 2021.

• The settlement caps a long-running federal investigation into Binance and its affiliated corporate entities. The U.S. government accused Binance of violations centred on allowing sanctioned and criminal individuals and entities to transact on its platform.

Zhao, a Canadian national and United Arab Emirates (UAE) resident, pled guilty in a federal court in Seattle, Washington on Tuesday. He was released on a $175mn bond and granted permission to return to the UAE pending sentencing in February 2024. It’s unclear if Zhao will see any prison time (prosecutors might ask for it, but it’s up to the judge to decide).

To cite a comparable case, Arthur Hayes, co-founder of crypto exchange BitMEX, pled guilty to anti-money laundering violations last year. He was sentenced to 6 months of home detention and 2 years probation plus a $10mn fine. BitMEX’s two other co-founders, Ben Delo and Samuel Reed, each got probation and a $10mn fine. Hayes and Reed are U.S. nationals, while Delo is a British citizen.

• Binance was previously sued by the Commodity Futures Trading Commission (CFTC) for offering unlicensed derivative trading services and by the Securities and Exchange Commission (SEC) for running an unregistered securities exchange, among other charges.

• Binance has settled with the CFTC, agreeing to pay a $1.35bn fine, and Zhao agreed to pay $150mn. However, the fines paid to the Justice Department will be credited against the CFTC’s settlement. Binance still faces potential civil penalties from the SEC.

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