Binance, the world's largest cryptocurrency exchange, will pay one of the largest corporate penalties in U.S. history as a coalition of federal regulators accused the company of violating laws in pursuit of growing market share.
The company will also pay $4.3 billion toward the settlement and founder Changpeng Zhao, better known as CZ, has agreed to step down and plead guilty to felony criminal charges of money laundering levied by the U.S. Department of Justice.
The Department of Justice has alleged Zhao violated the Bank Secrecy Act by failing to implement an effective anti-money laundering program at Binance, according to a court filing from last week unsealed Tuesday.
Prior to August 2021, Binance allowed many users to trade on its platform without proper Know Your Customer (KYC) systems, the complaint alleges, as Zhao believed «requiring all customers to provide KYC information would mean that some customers would choose not to use Binance and others would be rejected by the compliance process—both of which would interfere with Binance gaining market share.»
Not having these rules in place also allowed U.S. users to transact with sanctioned users and criminal enterprises. Treasury Secretary Janet Yellen said the company processed transactions linked with child sexual abuse, illegal narcotics and terrorism across more than 100,000 transactions without reporting suspicious activity.
«The message here should be clear, using new technology to break the law does not make you a disrupter. It makes you a criminal,» said U.S. Attorney General Merrick Garland said in a press conference Tuesday.
Binance came under the regulatory scanner in the U.S. as early as 2018, with the Justice Department investigating possibleRead more on investopedia.com