Binance CEO Zhao steps down as part of $4bn settlement

Binance CEO Changpeng Zhao stepped down as part of a major $4 billion settlement between United States agencies and the cryptocurrency exchange he co-founded.

The announcement from Zhao, commonly known as 'CZ' and multiple regulatory agencies on Tuesday capped yearslong investigations by the Department of Justice (DOJ) and others into anti-money laundering violations and sanctions violations.

“I made mistakes, and I must take responsibility,” Zhao wrote in a post to X, the platform formerly known as Twitter. “This is best for our community, for Binance, and for myself.”

In a press statement, the Crypto giant said it would take responsibility for not having appropriate compliance controls. “When Binance first launched, it did not have compliance controls adequate for the company that it was quickly becoming, and it should have.

Zhao’s departure as CEO, which was first reported by Forbes, will not be a complete separation from Binance. The company’s founder will remain its majority shareholder, and a resource for “consultation on historical areas of the business,” the company said. It added that Binance executive Richard Teng would succeed Zhao as CEO, confirming Forbes earlier reporting.

As part of the settlement, Zhao appeared in federal court in Seattle on Tuesday afternoon and pleaded guilty to anti-money laundering and sanctions violations brought by the Department of Justice. Additionally, Binance settled charges with the DOJ and Commodities Futures Trading Commission; the Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) and Office of Foreign Assets Control (OFAC), which will give the Treasury Department access to Binance’s books and records under the terms of a five-year monitorship.

“Because of the crimes committed, Binance became the largest cryptocurrency exchange in the world,” Merrick Garland, the US Attorney General, said during a press conference on Tuesday. “Now, Binance has paid one of the largest corporate penalties in US history.”

The Treasury Department said in a statement that it had taken “unprecedented action” to hold Binance accountable for violations of U.S. anti-money laundering laws. It alleged that Binance had failed to prevent and report “suspicious transactions with terrorists,” citing both Al Qaeda and ISIS. The settlement comes with a $3.4 billion penalty to FinCEN and $968 million to OFAC, as well as compliance requirements and monitoring for a period of five years.

“Binance turned a blind eye to its legal obligations in the pursuit of profit. Its willful failures allowed money to flow to terrorists, cybercriminals, and child abusers through its platform,” Treasury Secretary Janet Yellen during a press conference.

The CFTC did not respond to requests for comment at the time of publication.

The SEC previously charged Binance and Zhao in June with operating an unregistered exchange and misleading investors by using a Switzerland-based fund Sigma Chain, which was also owned by CZ, to inflate the trading volume on Binance’s U.S. platform. “Through thirteen charges, we allege that Zhao and Binance entities engaged in an extensive web of deception, conflicts of interest, lack of disclosure, and calculated evasion of the law,” SEC chair Gary Gensler said in June. The case is ongoing. The SEC declined to comment.

Brian Armstrong, the CEO and cofounder of Binance’s US competitor Coinbase, hailed the announcement as “an opportunity to start a new chapter for this industry,” in a post on X.

Armstrong, who’s company has faced its own regulatory scrutiny from the SEC, said that he hoped the action against Binance would serve as a catalyst for regulatory clarity.