© Reuters
Following a series of legal challenges, Binance, one of the world’s largest cryptocurrency exchanges, has agreed to a $4.3 billion settlement with several U.S. regulators over violations of cryptocurrency laws. sanctions and transfer of funds. This settlement includes a personal fine for former CEO Changpeng “CZ” Zhao, who also announced his resignation.
The legal proceedings began on Tuesday in Seattle, where Binance admitted to willful violations of the Bank Secrecy Act (BSA) and unlicensed money transfer activities. As part of the settlement with the Department of Justice, Binance agreed to pay more than $4.3 billion, and Zhao agreed to resign after pleading guilty and paying a $50 million fine.
The settlement had immediate repercussions on the cryptocurrency market. The experienced one of its largest liquidations of the year, with $67 million missing as traders failed to meet margin requirements during the liquidation. Traders at and suffered losses of $27 million and $10 million respectively, while (BNB) saw a smaller impact with $6 million in liquidations. The majority of these liquidations took place on Binance itself, where traders’ positions worth $100 million were wiped out; another platform, OKX, also suffered substantial losses amounting to $62 million.
Joint efforts by the Department of Justice, the Commodity Futures Trading Commission (CFTC), the Treasury Department, and the Financial Crimes Enforcement Network (FinCEN) resulted in various sanctions against Binance and its executives. The CFTC demanded the return of ill-gotten gains worth $1.35 billion, as well as civil penalties of an equivalent amount. Mr. Zhao was exempted from the fine imposed by the Justice Department, but must pay an additional $100 million to the CFTC. FinCEN required Binance to leave the US market and imposed supervision on it for five years, while OFAC added fines totaling almost $1 billion.
In response to these events, Richard Teng was named CEO of Binance. The company is expected to make significant changes to its compliance programs as part of the settlement.
Treasury will maintain its oversight over Binance for the next five years, with potential additional penalties of up to $150 million for violations. The crypto community is now eagerly awaiting Zhao’s sentencing, scheduled for February 23 next year, which will conclude this chapter in the history of cryptocurrency regulation.
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