In a significant development in the cryptocurrency world, Changpeng “CZ” Zhao will step down as the CEO of Binance. This move comes as part of a sweeping $4 billion settlement with the Department of Justice and the Commodities Futures Trading Commission, as per Bloomberg, marking a pivotal moment for the world’s largest cryptocurrency exchange.
CZ’s resignation and guilty plea
According to Forbes reporting, Zhao will plead guilty to DOJ’s anti-money laundering charges. He is scheduled to enter his plea in federal court in Seattle, as reported by the Wall Street Journal. This decision underscores the increasing regulatory pressures facing the cryptocurrency industry.
SEC’s charges against Binance
The Securities and Exchange Commission, although not participating in this settlement, had previously charged Binance and Zhao in June. The allegations included operating an unregistered exchange and misleading investors through Sigma Chain, a Switzerland-based fund also owned by CZ, to inflate trading volumes on Binance’s U.S. platform. SEC Chair Gary Gensler had highlighted an “extensive web of deception” in the charges against Zhao and Binance entities.
CFTC’s allegations and Binance’s response
The CFTC had also brought charges against Binance, accusing it of offering crypto derivatives to U.S. citizens without proper registration. However, the DOJ’s investigation into Binance, which reportedly began in 2018, reached a critical juncture with this settlement. In late 2020, Reuters reported that federal prosecutors had requested Binance to provide files and messages related to its U.S. customers, indicating the depth of the investigation.
In response to these regulatory challenges, Binance had formed a Global Advisory Board last September, led by former U.S. Senator and Ambassador to China Max Baucus. The board, featuring notable figures like David Plouffe and Bruno Bézard, aimed to strengthen the company’s compliance and advisory capabilities.
The resignation of CZ and the ensuing settlement mark a watershed moment for Binance and the broader cryptocurrency market. It highlights the increasing scrutiny and regulatory demands facing crypto exchanges and could set a precedent for compliance and governance in the digital asset industry.
