Binance Founder CZ Steps Down as CEO Amidst $4 Billion Settlement with US Authorities
Regulatory Investigations Culminate in Major Settlement
Changpeng “CZ” Zhao, the founder of Binance, has resigned as CEO following a significant $4 billion settlement reached with various United States agencies. This development marks the conclusion of extensive investigations, primarily led by the Department of Justice, into allegations of anti-money laundering and sanctions violations.
Zhao Acknowledges Mistakes and Assumes Responsibility
In a statement shared on X (formerly known as Twitter), Zhao admitted to making mistakes and emphasized the necessity of taking responsibility for them. He expressed that stepping down was in the best interest of the Binance community, the exchange itself, and personally.
Binance Admits Compliance Control Shortcomings
Binance, in an official press statement, accepted responsibility for lacking adequate compliance controls during its initial launch, acknowledging that it should have adapted to the growing scale of the company sooner.
Zhao’s Continued Involvement and Leadership Change at Binance
Despite resigning as CEO, Zhao will remain the majority shareholder of Binance and will serve as a resource for consultation on historical aspects of the business. Richard Teng, a Binance executive, is set to succeed Zhao as the new CEO.
Legal Proceedings and Unprecedented Corporate Penalty
As part of the settlement, Zhao pleaded guilty to anti-money laundering and sanctions violations in federal court in Seattle. The Department of Justice, Commodities Futures Trading Commission, and the Department of Treasury’s Financial Crimes Enforcement Network and Office of Foreign Assets Control were involved. The Treasury Department emphasized the unprecedented nature of the action, citing Binance’s failure to prevent and report suspicious transactions related to terrorist organizations.
Ramifications and Industry Response
The settlement includes a $3.4 billion penalty to FinCEN and $968 million to OFAC, with additional compliance requirements and a five-year monitorship. Binance’s neglect of legal obligations has been criticized for allowing funds to flow to terrorists, cybercriminals, and child abusers. Coinbase CEO Brian Armstrong sees this development as an opportunity for the industry to turn a new chapter, expressing hope that it will lead to increased regulatory clarity.