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Binance Guilty to Federal Charges in $4B

REPLAY LIVE EVENT Binance and CEO Plead Guilty to Federal Charges in $4B Resolution November 21, 2023.

U.S. Department of Justice LIVE event and press conference. Binance to Pay $4.3B to Settle U.S. Criminal Case; Changpeng 'CZ' Zhao Resigns as CEO and Pleads Guilty in Seattle Richard Teng takes over as CEO of the world's largest crypto exchange.

In a major development, Binance, the largest cryptocurrency exchange globally, has agreed to pay a staggering $4.3 billion to resolve a criminal case in the United States. Along with this settlement, Changpeng 'CZ' Zhao, the CEO of Binance, has taken the difficult decision to step down from his position and has also pleaded guilty in a court in Seattle. Stepping into his shoes as the new CEO is Richard Teng. This significant change in leadership marks a new era for the crypto exchange, and the industry as a whole will be closely watching how Teng navigates these uncharted waters.

Binance, a popular cryptocurrency exchange, has found itself in hot water with some serious allegations. It has been accused of neglecting its responsibility to maintain a robust anti-money laundering program, engaging in an unlicensed money-transmitting business, and even violating sanctions laws. These claims were made public when a court filing was unsealed earlier this week.

In fact, the founder of Binance, Changpeng Zhao, has already pleaded guilty to violating the Bank Secrecy Act. He was also found to have caused a financial institution to breach the same act. As a result, he will be facing a hefty fine, which will be deducted from the amount owed to the Commodity Futures Trading Commission.

During a press conference, Attorney General Merrick Garland shed more light on the situation. He revealed that Binance employees were fully aware that the company was serving thousands of users in countries that were under sanctions. Despite this knowledge, they facilitated transactions between users in these sanctioned countries and users in the United States, which is a clear violation of U.S. law.

The consequences for Binance are significant. The exchange will be shelling out a staggering $4.3 billion as a penalty, making it one of the largest fines ever imposed on a corporate defendant. It's worth noting that this amount will be distributed between various agencies involved in the case.

Moreover, the U.S. Treasury Department and the Commodity Futures Trading Commission have also reached settlements with Binance separately. Treasury Secretary Janet Yellen expressed that the settlement between her department's money laundering and sanctions watchdogs and Binance is the largest in the history of the Treasury.

These developments paint a grave picture for Binance, highlighting the importance of adhering to regulations and laws within the financial industry.

Binance's response

In a recent blog post, Binance openly acknowledged the agreements it has reached with various agencies, expressing its commitment to restructuring efforts over the past few years. The post emphasized the exchange's new leadership, which boasts extensive compliance experience. With optimism, the blog post stated that Binance is poised to emerge as a stronger company, laying a solid foundation for the next half-century. 

Teng, the newly appointed head of the exchange, reassured stakeholders that Binance still serves a vast community of approximately 150 million users, supported by thousands of dedicated employees. In a tweet, Teng outlined his key areas of focus, which include instilling confidence in users regarding the company's financial strength, security, and safety; collaborating with regulators worldwide to maintain high standards that promote innovation while safeguarding consumers; and fostering growth and adoption of Web3 through partnerships. Additionally, Zhao, the founder, mentioned his potential involvement in passive investing and minority partnerships across various projects, alongside his interest in exploring the realm of decentralized finance (DeFi).

'Significant' action

On Tuesday morning, the Department of Justice made an important announcement regarding the enforcement of cryptocurrency regulations. To convey the gravity of the situation, Attorney General Garland, Treasury Secretary Yellen, Deputy Attorney General Lisa Monaco, and CFTC Chairman Rostin Behnam joined forces in a press conference. Monaco, during this address, emphasized the significance of the actions taken that day, which served as a clear message to cryptocurrency and DeFi companies. Notably, the officials highlighted the alleged violations committed by Binance, such as their inadequate anti-money laundering measures.

"Over five years while building a business with U.S. customers, Binance enabled nearly $1 billion in illegal payments involving sanctioned countries and individuals," Monaco said.

Bloomberg, which first reported that Tuesday's press conference would be about Binance, reported on Monday that Binance could settle the DOJ's charges with a $4 billion fine and a deferred prosecution agreement. Reuters later confirmed the announcement would detail the DOJ's deal with Binance. The Wall Street Journal first reported Zhao would step down. Binance's BNB token recently dropped 4.6%.UPDATE (Nov. 21, 2023, 16:45 UTC): Adds additional detail, including confirmation about what Tuesday's press conference will discuss.

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