US authorities can claim success in their years-long investigation against the world’s largest crypto exchange Binance. Above all, they hope for a signal that there is no getting around the law.
The world’s largest cryptocurrency exchange Binance has admitted violations of money laundering laws in the USA and will pay a fine worth billions. Founder and boss Changpeng Zhao must give up all positions at the company and Binance will be placed under supervision for three years. For the US government, the result of its years-long investigation is a success in its efforts to subject the business of cryptocurrencies such as Bitcoin to the usual financial market regulation.
Binance will face a total of around $4.3 billion in penalties, according to court documents published on Tuesday. Zhao personally will also pay $50 million. According to the guilty plea, he is not allowed to hold any positions at Binance during the three-year supervision period.
Zhao himself wrote on the online platform X that he no longer sees himself as the head of a start-up in the future. Richard Teng, who was previously responsible for local markets, will take over the head position at Binance. At the same time, Zhao appears to be able to retain his majority stake in Binance. In the current billionaire rankings by the financial service Bloomberg, he is in 68th place with an estimated fortune of $23.5 billion.
Other market participants should be deterred
After years of investigation, the US justice system accused Binance and Zhao of circumventing money laundering and sanctions laws. Despite millions of customers in the USA, the operators of the crypto exchange did not set up the required controls. This made questionable flows of money possible, including around $900 million between the USA and Iran, which is affected by sanctions. According to the prosecution’s allegations, Zhao instructed Binance employees, among other things, to communicate with US customers by telephone so as not to leave any traces.
The responsible public prosecutor Nicole Argentieri hopes for a signal that will deter other market participants from similar practices: “If they serve US customers, they must comply with US laws.” US Attorney General Merrick Garland pointed out that Binance had become the world’s largest trading center for cryptocurrencies due to violations of the law.
Around a year ago, Binance’s major competitor FTX collapsed, and its founder Sam Bankman-Fried was finally found guilty of fraud in a sensational trial in New York a few weeks ago. US investigators had convinced the jury that Bankman-Fried was secretly diverting customer money for business for his own hedge fund.
Zhao emphasized that US authorities do not accuse Binance of embezzling customer funds or manipulating markets.
Source: Stern
