Cryptocurrencies: agreement between Binance and the US authorities, resignation of the emblematic boss

Europe 1 with AFP / Photo credits: Jaap Arriens / NurPhoto / NurPhoto via AFP 17:18 p.m., November 22, 2023

The world's largest cryptocurrency exchange, Binance, and its chief executive, Changpeng Zhao, have reached an agreement with the US authorities, which provides for the resignation of the iconic boss. "CZ," as he is known, has agreed to plead guilty to violating U.S. anti-money laundering laws, the U.S. Department of Justice announced Tuesday. He made his case before a federal judge in Seattle, Wash., at a hearing Tuesday.

>> ALSO READ - Cryptocurrencies: $100 million stolen from Binance after hack

Former boss faces several years in prison

Changpeng Zhao, 46, faces several years in prison. He will be sentenced at a later date. "I have made mistakes and I have to take responsibility for them," he wrote on his X account (ex-Twitter). He will be replaced at the head of Binance by Richard Teng, who was previously in charge of regional markets. As part of a global settlement, Binance will also plead guilty to violations of U.S. law.

The company agreed to pay fines of $3.4 billion and $968 million to two agencies under the U.S. Treasury, the Treasury Department said. U.S. authorities have been investigating the platform since at least 2018, according to several U.S. media outlets, but had not officially taken the matter to court until now.

Co-founder, boss, and majority shareholder of the company, Changpeng Zhao is the most famous personality in the world of digital currencies. Binance is, by far, the largest cryptocurrency exchange, with about $12 billion in transactions in the last 24 hours, according to the specialized site CoinMarketCap. The U.S. investigation, widely reported in the press, has been a threat to Binance for several years, several of whose executives have resigned in recent months.

Growth over compliance

In addition, the platform was sued in civil court this year by the two main financial market regulatory agencies, the SEC and the CFTC. In particular, the latter accuses Binance of not having taken sufficient measures to prevent money laundering. Customers could access the platform without having their identity verified beforehand.

>> READ ALSO - Cryptocurrency and blockchain: what is Web3, in the spotlight at the Vivatech show?

According to investigations by two Treasury agencies, Binance did not take steps to prevent transactions carried out by movements such as the Islamic State group, al-Qaeda or the Ezzedine al-Qassam Brigades, Hamas' armed wing. "By failing to implement anti-money laundering measures, Binance has allowed a wide range of criminal actors to trade on the platform," the U.S. Treasury said.

U.S. customers retained

Digital currencies are regularly used by criminal organizations to move their assets. Overall, the sector offers a certain degree of anonymity and fewer guarantees against money laundering than the traditional financial system, which is subject to very heavy compliance obligations. "Since its inception, Binance, and its founder Changpeng Zhao, have prioritized (respectively) growth and personal wealth over financial regulations designed to prevent the laundering of criminal assets," Seattle federal prosecutor Tessa Gorman said in a statement.

The investigation also revealed that after pledging in 2019 to stop accepting U.S. customers, Binance kept some, especially those that were the most active and generated considerable revenue for the site. "When Binance launched, it did not have the right compliance control tools for the company it was becoming," the company said in a statement on its website. The company acknowledged "unfortunate decisions" and said it "takes responsibility for this chapter" of its history.

The deal may allow "CZ" to retain its stake in Binance

According to the Wall Street Journal, the deal with the authorities would allow Changpeng Zhao, a Chinese-born Canadian citizen, to retain his stake in Binance. Binance has committed to the U.S. authorities to use the services of an external compliance observer for a period of three years, and to comply with the laws in force in this area.

>> ALSO READ - Ukraine: Are Russians Using Cryptocurrencies to Bypass Sanctions?

Changpeng Zhao said he doesn't see himself taking the helm of a new start-up. "I am satisfied that I have been the (lucky) entrepreneur of only one adventure," he wrote. He also mentioned the possibility of advising young entrepreneurs. "At worst, I could at least tell them what not to do."