In a stunning turn of events, Changpeng Zhao, the founder of Binance, the world’s largest cryptocurrency exchange, has pleaded guilty to money laundering violations, dealing a severe blow to the most influential figure in the global crypto industry. The new reports revealed this development on Tuesday.
Binance, as an entity, has also pleaded guilty and agreed to pay a hefty $4.3 billion in fines and restitution to the government. The settlements were reached with the Justice Department, the Treasury Department, and the Commodity Futures Trading Commission, all of which have been investigating the company for several years.
As part of his guilty plea, Zhao has accepted a $50 million fine and will step down from his role as the company’s chief executive. He faces up to 18 months in prison under federal sentencing guidelines, with the possibility of a stiffer penalty, according to statements of senior Justice Department officials shared with media houses.
In a parallel plea deal, Binance has agreed to the appointment of a government monitor to oversee its business operations. As per court papers, Zhao is prohibited from involvement in Binance until three years after the monitor’s appointment.
Zhao and a representative for Binance entered the guilty pleas in federal court in Seattle. Binance, in a statement, acknowledged its responsibility for historical criminal compliance violations. Richard Teng, a top executive, is set to take over as chief executive, with Zhao remaining available for consultation on historical areas of the business.
Tweeting on X, formerly known as Twitter, Zhao admitted to making mistakes and expressed a commitment to taking responsibility. He also revealed plans to take a break from his demanding schedule and engage in “passive investing” in various crypto projects.
For the cryptocurrency world, this development marks a monumental shift. Binance has been a key player, at times processing two-thirds of all digital currency trades. Zhao, often considered the richest man in crypto, boasts over 8.5 million followers on the platform.
This guilty plea by Binance and its founder follows another blow dealt by the Justice Department this month. Sam Bankman-Fried, the disgraced crypto mogul, was convicted of fraud in a criminal trial related to the collapse of his FTX crypto exchange.