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Binance and CEO Zhao Fined Billions in Money Laundering Case

2023.12.19

 

Key Takeaways

  • Changpeng Zhao and Binance to pay $150 million and $2.7 billion, respectively, in CFTC case.
  • Court sanctions follow a guilty plea for anti-money laundering violations and reporting failures.

Historic Fines for Compliance Violations

In a landmark ruling, the U.S. District Court for the Northern District of Illinois has ordered significant penalties against cryptocurrency exchange Binance and its former CEO, Changpeng Zhao. Following a case by the U.S. Commodity Futures Trading Commission (CFTC), Zhao was personally fined $150 million, while Binance faced a combined fine of $2.7 billion.

 

The court’s decision, which ratified a settlement reached in November, included a consent order for a permanent injunction, a substantial civil monetary penalty, and equitable relief against both Zhao and Binance. The fines were imposed for numerous violations of U.S. anti-money laundering laws.

Details of the Penalties

Binance’s penalty was twofold: a disgorgement of $1.35 billion in illicit transaction fees and an additional $1.35 billion as a direct penalty to the CFTC. These fines represented one of the most significant financial sanctions in the history of cryptocurrency regulation.

Zhao’s Guilty Plea and Resignation

Zhao’s decision to step down as CEO in November was accompanied by a guilty plea, acknowledging Binance’s failure to adhere to U.S. anti-money laundering regulations. This plea was part of the settlement that concluded the years-long investigation into the world’s largest crypto exchange by trading volume.

Acknowledgment and Responsibility

In the wake of these resolutions, Binance issued a statement recognizing its responsibility for past compliance failings. The company expressed its intention to move forward, emphasizing a commitment to enhanced regulatory compliance.

 

Investigations revealed that Binance had breached U.S. laws by failing to report over 100,000 suspicious transactions. These included dealings with entities labeled as terrorist groups by the U.S. and transactions linked to websites involved in child sexual abuse material. Additionally, Binance was identified as a significant recipient of ransomware payments.

 


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