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Binance to Pay $4.3 Billion for Breaching the Bank Secrecy Act

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SEATTLE: Changpeng Zhao, the CEO of Binance, has resigned after pleading guilty in US federal court to breaching the Bank Secrecy Act and money laundering. Changpeng Zhao was accused with violating sanctions and money-laundering laws and agreed to pay $4.3 billion to settle the claims, resulting in “one of the largest penalties” the US has ever collected from a corporate defendant.

Zhao pled guilty in Federal Court to charges brought against him personally and agreed to pay a $50 million fine as well as resign as CEO.

Former Abu Dhabi regulator Richard Teng, who later became Binance’s regional markets head, will take over as CEO.

A court document filed on Tuesday accused Binance of failing to maintain a proper anti-money laundering program, operating an unauthorized money-transmitting firm, and breaching sanctions law.

According to another filing, Zhao pleaded guilty to breaching the Bank Secrecy Act and inducing a financial institution to violate the BSA. According to the US Department of Justice, his fine will be applied to the amount he owes the Commodity Futures Trading Commission.

Money laundering and sanctions

“Binance employees were aware of and discussed the fact that the company served thousands of users from sanctioned countries, and they were aware that facilitating transactions between US users and users from sanctioned countries would violate US law.”

But they did it anyhow,” Attorney General Merrick Garland said at a press conference on Tuesday.

According to Garland, the $4.3 billion penalty paid by Binance is among the biggest ever imposed on a business defendant. The total fine for the trade remained $4.3 billion, with some of it credited to each agency.

Separately, the US Treasury Department and the Commodity Futures Trading Commission announced their own agreements with Binance. Binance’s settlement with Treasury’s money laundering and sanctions watchdogs was the largest in Treasury history, according to Treasury Secretary Janet Yellen.

Binance will be required to establish an independent compliance monitor for three years and submit its compliance efforts to the US authorities, in addition to paying fines, under the conditions of its plea agreement. Zhao is barred from “any present or future involvement in operating or managing” Binance for three years after the monitor is appointed.

The Binance case settlement signals another significant US government success against a prominent crypto operator, coming just weeks after FTX founder Sam Bankman-Fried was convicted guilty of fraud and conspiracy charges related to his crypto exchange.

Binance will emerge as a stronger company

According to unsealed filings, Zhao “prioritized Binance’s growth, market share, and profits over compliance with” US banking requirements.

“Better to ask forgiveness than permission,” he advised his colleagues, according to the document. That approach dominated Binance’s activities in the United States, which Zhao referred to as a “grey zone.” He ensured that Binance did not collect “know-your-customer” data on its users because he feared it would stifle its growth and appeal.

Such oversights put Binance at risk of violating a number of US laws, including sanctions regulations. According to prosecution documents, Zhao’s team told him that the exchange served consumers from sanctioned countries.

Binance recognized the “resolutions” it achieved with the various authorities cited in a blog post, stating that the exchange had worked to restructure over the previous few years and highlighted its “new leadership… with deep compliance experience.”

“We are confident that Binance will emerge as a stronger company as we lay the foundation for the next 50 years,” according to the blog post.

Binance, according to Teng, still has over 150 million users and hundreds of workers.

Zhao stated that he may engage in passive investment or be a minority shareholder in various initiatives, as well as investigate decentralized finance (DeFi) further.

Binance will settle the DOJ’s claims with a $4 billion fine and a deferred prosecution deal, according to Bloomberg, which first reported on Tuesday’s news conference.

Reuters later confirmed that the statement would include information about the DOJ’s agreement with Binance. Zhao stepped resigned, according to the Wall Street Journal.

Binance’s BNB token has lately fallen 4.6%.

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