Binance has pleaded guilty to multiple charges brought against it by the United States Department of Justice and has agreed to pay a staggering $4.3 billion penalty as part of a settlement deal. The US DOJ announced this development in an official statement published on Tuesday, November 21, 2023.
The charges against Binance include engaging in activities that violate the Anti-Money Laundering (AML) regulations, conspiring to operate an unlicensed money-transmitting business, and violating U.S. sanctions by providing services to Iran without proper authorization.
Biggest Penalty in the Crypto Industry History
The 4.3 billion penalty comprises a $1.8 billion penalty and a forfeiture order requiring Binance to pay an additional $2.5 billion. As we previously reported, this is the largest penalty ever imposed in criminal cryptocurrency cases in the United States.
Binance will also be subject to a monitorship for a period of five years. An external party, overseen by the Financial Crimes Enforcement Network (FinCEN), will be appointed to “monitor” Binance’s activities; the monitor will review and report on actions covered by the settlement and will be able to access Binance’s systems, transactions, and accounts. The monitor will also oversee Binance’s “complete exit” from the U.S.
Action Against Changpeng Zhao
The settlement deal also impacts Changpeng Zhao (fondly called “C.Z.”), Binance’s CEO and co-founder. Like Binance, Zhao pleaded guilty to AML charges. Specifically, Zhao has pleaded guilty to violating and causing a financial institution to violate the U.S. Bank Secrecy Act. He has agreed to pay a $50 million fine.
Reports suggest that Zhao may face 18 months in prison as part of his plea deal.
JUST IN: #Binance CEO Changpeng Zhao (CZ) facing 18 months in prison as part of his plea deal with the US Government.
— Watcher.Guru (@WatcherGuru) November 21, 2023
A long investigation
The unprecedented fines come as regulatory scrutiny on cryptocurrency exchanges has intensified in the U.S. and globally. Binance, in particular, has faced increasing pressure from regulators who have raised concerns about the potential for illicit activities and money laundering within the platform.
Interestingly, the U.S. DOJ’s investigation into the exchange activities that resulted in this settlement deal reportedly began back in 2018, just one year after the exchange’s launch.
The investigation involved coordinated efforts between the DOJ, the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN), the Office of Foreign Assets Control (OFAC), and the U.S. Commodity Futures Trading Commission (CFTC).
During her remarks at a press conference announcing the sanctions and penalty, the U.S. Treasury Secretary, Janet Yellen, sounded a note of warning to crypto companies to abide by the country’s rules and regulations for their operations.
“If virtual currency exchanges and financial technology firms wish to realize the tremendous benefits of being part of the U.S. financial system and serving U.S. customers, they must play by the rules. And if they do not, the U.S. government will take action, ”
Yellen stated.
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