Billionaire Changpeng Zhao, founder and chief executive of Binance, the largest global digital currency exchange, was instrumental in the fall of FTX, the cryptocurrency platform led by San Bankman-Fried, recently convicted in New York for massive fraud in which he will receive a sentence of practically life imprisonment. But in another case of the hunted hunter, Zhao resigned after settling with the United States Department of Justice for violating money laundering laws, in a total deal of $4.3 billion.
The prejudicial treatment will allow Binance to maintain its ability to operate in the market, according to the agreed conditions. This emerged just before Zhao appeared in federal court in Seattle, Washington, to confirm his guilty plea.
This agreement will end a long investigation into Binance. Zhao founded this firm in 2017 and turned it into the main and most important nucleus of the global cryptocurrency market. The criminal investigation has cast a shadow over the company, despite the fact that its market share grew after the collapse of FTX, one of its largest competitors, whose fall caused an earthquake in this industry with a domino effect on other companies.
Despite acknowledging his guilt, the pact will allow Zhao to retain the majority of ownership of Binance, although he will not be able to hold executive positions in the company. He will also face a sentence in a few months.
Zhao, known as CZ, and others were charged with violating the bank secrecy law by failing to effectively implement the anti-money laundering program and for intentionally acting against US economic sanctions, “in a deliberate and calculated effort to take advantage of the market without applying the controls required by US laws,” the Department of Justice stressed.
This entire process does not include a possible agreement with the US Securities and Exchange Commission (SEC), which sued Zhao and Binance last June for not respecting investor protection laws. Large digital currency exchange companies like Binance chose to litigate with the SEC. They start from the principle, according to their theory, that cryptocurrencies do not qualify as investments regulated by this commission.
Instead, the Justice Department’s investigation focused on programs to detect and prevent money laundering, which Binance ignored, and whether this allowed individuals from sanctioned countries, such as Ireland or Russia, to trade. In the US, Zhao and Binance still have more outstanding accounts with the Futures Trading Commission (CFTC), which argued some time ago that this company did not have the mechanisms to prevent and detect terrorist financing.
Zhao resides in the United Arab Emirates and has restricted his travel throughout this year. The Emirates and the US do not have a mutual extradition treaty, although they do have an agreement to share evidence between security forces. Emirates is a country open to cryptocurrencies.
