As part of the plea deal with prosecutors, Binance has agreed to pay the United States Department of Justice (DoJ) $4.3 billion.
The chief executive officer (CEO) of Binance Changpeng Zhao (CZ) has pleaded guilty to federal money laundering charges and announced he is stepping down from the helm of affairs at the world’s largest cryptocurrency exchange. Zhao stepped down as part of a deal that could let Binance continue its operations uninterrupted, according to a WSJ report. The former CEO pleaded guilty in Seattle federal court on Tuesday.
Changpeng Zhao Leaves CEO Position at Binance
In a long-form post on X (formerly Twitter), Zhao announced his departure from the CEO role. However, the CEO did not directly specify in the message that a plea deal informed his decision to step down:
“Today, I stepped down as CEO of Binance. Admittedly, it was not easy to let go emotionally. But I know it is the right thing to do. I made mistakes, and I must take responsibility. This is best for our community, for Binance, and for myself.”
According to Zhao, now former Global Head of Regional Markets at Binance Richard Teng has taken over as the CEO. According to his LinkedIn page, Teng has been at Binance for over 2 years, rising quickly through the ranks. He became the CEO of Binance Singapore in August 2021 and maintained the role for 5 months before being promoted to the Regional Head of the MENA region in December 2021. After 11 months, Teng became the Regional Head of Europe and MENA and was promoted twice in about 8 months to Head of Regional Markets in May 2023. The new CEO is an experienced hand, formerly in management roles at the Monetary Authority of Singapore and the Singapore Exchange (SGX). Teng also spent 6 years as the CEO of Abu Dhabi Global Market (ADGM).
As part of the plea deal with prosecutors, Binance has agreed to pay the United States Department of Justice (DoJ) $4.3 billion. There are also agreements with several other agencies, including the Commodity Futures Trading Commission (CFTC), the Department of Treasury’s Financial Crimes Enforcement Network (FinCEN), and the Office of Foreign Assets Control (OFAC). Binance will reportedly lose $1.8 billion to these agreements.
Alleged Binance Misconduct
Recently unsealed charging documents contain details of Binance’s misconduct over the years. According to reports, Binance focused heavily on the US market, targeting “VIP” customers who could considerably increase the exchange’s trading volume. Court filings also show that in 2018, up to 30% of Binance’s web traffic and nearly as much revenue, came from the US. Zhao allegedly did not take adequate measures to filter said customers even though he knew the exchange did not satisfy US requirements.
Although Binance.US launched in 2019, the main exchange had 16% of its customer base from the US by September 2020 despite the restrictions. Allegedly, Binance deliberately replaced the “United States” part of its customer base pie chart with “UNKWN”. Between August 2017 and October 2022, US customers conducted transactions worth trillions of dollars and generated profits worth $1.6 billion.
In addition, documents allege that Binance facilitated “at least 1.1 million” transactions worth about $900 million. The exchange allegedly made staff ignore illicit users and allow these transactions if they were VIP customers.
Nonetheless, the Binance CEO’s X post assures that all Binance funds are SAFU. He points out that prosecuting agencies “do not allege that Binance misappropriated any user funds” or “engaged in any market manipulation”.