Changpeng Zhao, the CEO of the popular crypto trading platform Binance, is expected to step down from his role amid reports of him admitting to violating US anti-money laundering laws, according to sources cited by The Wall Street Journal.
Reports suggest that Zhao will make his confession in a Seattle court on Tuesday afternoon, local time. Binance itself is also said to be pleading guilty to the charges brought against it and has agreed to pay a hefty $4.3 billion in fines, which includes settling civil cases with regulators.
Despite the legal troubles, sources familiar with the matter claim that the agreement reached may allow Binance to continue operating in the United States. The deal also stipulates that Zhao will retain his majority stake in the company but will no longer have a leadership role moving forward. Sentencing for Zhao is expected to take place at a later date.
The plea deal marks the conclusion of extensive investigations into Binance, including scrutiny from the US Department of Justice, notes The Wall Street Journal. The investigations focused on the platform's anti-money laundering practices and its compliance measures to prevent individuals from sanctioned countries like Russia and Iran from using its services.
However, it's worth mentioning that the settlement does not include any resolution with the US Securities and Exchange Commission (SEC), which filed a lawsuit against Binance and Zhao earlier in June alleging that the platform was operating illegally in the US and mishandling customer funds. Binance is currently in litigation with the SEC, contending that cryptocurrencies fall outside the regulatory purview of the commission.
Additionally, the agreement also addresses a civil lawsuit brought by the Commodity Futures Trading Commission, where it was alleged that Binance lacked adequate systems for detecting terrorist financing and money laundering activities over an extended period. The regulator also highlighted that Binance granted Americans access to trading instruments like futures and swaps, which are typically only permitted on regulated platforms. Notably, Binance had never registered with US regulators.
Binance has faced regulatory challenges in various jurisdictions, including the Netherlands, where it was banned earlier this year for failing to register with the De Nederlandsche Bank (DNB). Cryptocurrency platforms are required to seek registration to comply with anti-money laundering regulations in order to operate in the Netherlands. Binance maintained that it was in compliance with all European laws, but due to confidentiality constraints, the DNB was unable to provide a detailed response to Binance's assertions at the time.
English (US)