SEATTLE (CN) — Leading cryptocurrency exchange Binance joined its founder in agreeing to pay $4.3 billion in penalties on Tuesday after the company and its founder pleaded guilty to federal charges of violating anti-money laundering laws.
The costly resolution arrives a week after the U.S. Department of Justice filed separate criminal complaints in Seattle’s federal court accusing Binance and its founder and CEO, Changpeng Zhao, of violating the Bank Secrecy Act by failing to implement an effective anti-money laundering program for what is currently the largest cryptocurrency exchange in the world.
Binance also pleaded guilty to two additional charges of violating the International Emergency Economic Powers Act and operating an unlicensed money transmitting business.
Unsealed court documents from Monday revealed that Binance operated as an unlicensed money transferring business to prevent U.S. regulators from discovering that it facilitated billions of dollars’ worth of cryptocurrency without the proper oversight to prevent the company and its U.S. customers from engaging in illegal transactions.
By failing to an effective anti-money laundering program, prosecutors say that Binance — under the leadership of Zhao, who has now stepped down — processed transactions between 2017 and 2022 involving “illicit mixing services and laundered proceeds of darknet market transactions, hacks, ransomware and scams.”
The charges echo those of a separate federal lawsuit led by the Securities and Exchange Commission in June. In that complaint — filed in the U.S. District Court for the District of Columbia — the government accuses Binance and Zhao of unjust enrichment through a “blatant disregard” of federal security laws while placing investor assets at risk.
Since launching Binance in 2017, federal prosecutors say in their complaint against Zhao that he prioritized the company’s “growth and profits over compliance with U.S. law, telling Binance employees that it was ‘better to ask for forgiveness than permission’ in what he described as a ‘grey zone.’”
“Binance became the world’s largest cryptocurrency exchange in part because of the crimes it committed — now it is paying one of the largest corporate penalties in U.S. history,” said U.S. Attorney General Merrick B. Garland, in a statement. “In just the past month, the Justice Department has successfully prosecuted the CEOs of two of the world’s largest cryptocurrency exchanges in two separate criminal cases. The message here should be clear: using new technology to break the law does not make you a disruptor, it makes you a criminal.”
The Associated Press reported that one of Zhao’s attorneys, Mark Bartlett, said that the Canadian national had known of the investigation since December 2020 and surrendered willingly — leaving behind his wife and children in the United Arab Emirates where they currently live.
On Tuesday, Zhao reportedly promised U.S. Magistrate Judge Brian A. Tsuchida that he would return to the U.S. for his sentencing on Feb. 23, 2023, if he could return to his family until then.
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