The crypto market has been rocked by yet another blow today, following cryptocurrency exchange Binance’s move in pleading guilty to anti-money laundering and US sanction violations. This ultimately led to the abrupt resignation of the platform’s founder, Changpeng Zhao – better known to the public as CZ – as well as Binance’s agreement to pay US$4.3 billion in a deal to settle the various allegations levied at them by the US Department of Justice (DOJ).

Following the breaking of the news and CZ’s announcement of his decision to step down, the price of Binance’s native token, Binance Coin (BNB) took a hit, crashing by over 8% within an hour from US$258 to $244. It is currently trading at US$234.

Bitcoin also fell by nearly 5% to US$35,714 (about RM167,105), whereas Ether took a 4.5% dip. As of the time of writing, Bitcoin has recovered slightly to trade at US$36,509 (approximately RM170,872), while Ether is at US1,994 (approximately RM9,327).

In addition to his resignation, CZ will also be barred from any involvement in Binance for a specified period of time – although he continues to retain some stakes in the company – and is required to personally pay a fine of US$50 million (criminal fine) and US$150 million (civil penalty). Additionally, he faces potential prison time of up to 10 years. Meanwhile, Binance itself needs to appoint an independent compliance monitor to oversee its operations through the next five years (on top of paying the fine) and report suspicious activities to federal authorities as and when needed.

Announcing his resignation on X (formerly known as Twitter), CZ said that “it is not easy to let go emotionally”, but that “it is the right thing to do”. He also said that he has “made mistakes”, and therefore “must take responsibility”.

“On that note, I am proud to point out that in our resolutions with the US agencies, they do not allege Binance misappropriated any user funds, and do not allege that Binance engaged in any market manipulation,” CZ further said.

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.

Binance is no longer a baby. It is…

— CZ 🔶 BNB (@cz_binance) November 21, 2023

Binance also responded to the matter in a blog post, where it acknowledged the turn that the case has taken. It further said that it is confident of “emerging as a stronger company as we lay the foundation for the next 50 years” under the guidance of a “new leadership…with deep compliance experience”; former Global Head of Regional Markets at Binance, Richard Teng has been named the new CEO of Binance to take over from CZ.

For context, Binance – known as the world’s largest crypto exchange – had been accused by the BOJ of conducting an unlicensed money transmitter business, conspiracy, and breaching of sanctions regulations. Among other things, the DOJ said the exchange had helped users to bypass sanctions across the world and made it easy for criminals and terrorists to move money, citing direct transfers of approximately US$106 million from Hydra (a popular Russian darknet marketplace) to Binance as an example. It also said that Binance intentionally avoided collecting “know-your-customer” information on its users because this may inhibit its growth and appeal.

This latest news came at the heels of another recent court proceeding related to the crypto industry, namely the conviction of FTX founder Sam Bankman-Fried, who was found guilty of all the charges made against him over his fallen crypto exchange. He was charged with seven counts of wire fraud, securities fraud, and money laundering – committed against FTX customers and lenders of its sister hedge fund, Alameda Research.

(Sources: CNN, Coindesk)

• TAGS:
• Binance
• Binance Coin (BNB)
• Bitcoin
• Changpeng "CZ" Zhao
• Court Rulings
• Courtroom Cases
• Ether
• Hydra
• Richard Teng
• US Department of Justice (DOJ)