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U.S. Authorities Reach $4.3 Billion Agreement with Binance, Strike Plea Deal with CZ

22 Nov 2023

Mitchell Nixon

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The United States Department of Justice revealed that Binance’s CEO, Changpeng “CZ” Zhao, has agreed to plead guilty to a felony charge as part of a resolution involving both criminal and civil cases related to the exchange.

During a press briefing on November 21, Attorney General Merrick Garland disclosed that CZ personally entered his plea in a U.S. federal court, despite residing outside the country. He also outlined a $4.3 billion settlement encompassing both Binance and CZ, addressing “civil regulatory enforcement actions” from various government agencies, such as the U.S. Treasury and the Commodity Futures Trading Commission (CFTC).

Garland accused Binance of enabling individuals involved in unlawful activities to transfer “stolen funds” through their platform. He alleged that the exchange had falsely claimed compliance with U.S. federal laws by providing access to specific users, despite their association with illicit funds. As part of the settlement, the exchange will undergo stringent monitoring and reporting measures and will be required to submit suspicious activity reports for previous transactions.

“Binance prioritise its profits over the safety of the American people,” stated Garland. “Using new technology to break the law does not make you a disruptor, it makes you a criminal.”

CZ has agreed to pay a $50 million dollar fine. 

Zhao admitted guilt for breaching the Bank Secrecy Act and prompting a financial institution to also violate this regulation, as per additional documentation. The fine imposed will offset a portion of his debt owed to the Commodity Futures Trading Commission, as detailed in the U.S. Department of Justice filing.

As part of the agreement, Binance must designate an independent compliance overseer for a three-year duration and regularly update the U.S. government on its adherence to regulations, in addition to the imposed penalties. Zhao is barred from any current or future role in directing or overseeing Binance operations, with this prohibition lifting three years after the appointment of the overseer.

The conclusion of the Binance case marks another significant success for the U.S. government in its actions against prominent cryptocurrency entities. This follows shortly after FTX founder Sam Bankman-Fried was convicted of fraud and conspiracy allegations related to his crypto exchange.

We did an article on that here.

Binance has released a full statement, stating the following:

“While Binance is not perfect, it has strived to protect users since its early days as a small startup and has made tremendous efforts to invest in security and compliance. However, when Binance first launched, it did not have compliance controls adequate for the company that it was quickly becoming, and it should have. Binance grew at an extremely fast pace globally, in a new and evolving industry that was in the early stages of regulation, and Binance made misguided decisions along the way. Today, Binance takes responsibility for this past chapter.”

“Equally important, we have never faltered in upholding our core values of user security and safety. We take our responsibility as a custodian very seriously and maintain 1:1 backing for every user asset. This means that users can withdraw 100 percent of their assets from the platform at any time. Of note, in our resolutions with the U.S. agencies they:

  • do not allege that Binance misappropriated any user funds, and
  • do not allege that Binance engaged in any market manipulation.”

You can read the full statement here. 

Additionally, CZ’s statement from X can be read below: