Binance CEO Changpeng “CZ” Zhao will admit violating US laws as part of a $4-billion settlement resolving a years-long probe into illicit finance breaches at the world’s largest crypto exchange, said two sources familiar with the matter.
He will also step down and plead guilty to violating criminal US anti-money laundering requirements in a Seattle federal court on Tuesday, the Wall Street Journal reported on Tuesday.
The deal, which will resolve allegations the company violated illicit finance and money-laundering laws, involves the justice department, the Commodity Futures Trading Commission (CFTC) and the treasury department, the sources said.
The company will pay $3.4-billion to the treasury’s Financial Crimes Enforcement Network office and $968-million to the treasury’s sanction unit, one of the sources said.
Binance’s former chief compliance officer Samuel Lim will also be charged as part of the settlement, the other source said, adding Binance will also be required to remediate its lapses.
Lawyers for Zhao and Binance, as well as a company spokesman, did not immediately respond to calls for comment.
A spokesman for the DoJ declined to comment. The CFTC and treasury department did not respond to requests for comment.
Binance has been under the justice department’s scrutiny since at least 2018, just one of a string of legal headaches it faces in the US.
Internal records
Federal prosecutors at the agency asked the company in December 2020 to provide internal records about its anti-money laundering efforts, along with communications involving Zhao, who founded the company in 2017.
The CFTC in March filed civil charges against Binance, alleging it failed to implement an effective anti-money laundering program to detect and prevent terrorist financing.
Internally, Binance officers and employees acknowledged that the platform facilitated “potentially illegal activities”, the CFTC alleged.
Read: Binance did monthly transactions ‘worth $90bn’ in banned China market
In February 2019, Binance’s former chief compliance officer, Lim, received information on transactions by the militant Palestinian group Hamas on Binance, the CFTC wrote.
Zhao, a billionaire who was born in China and moved to Canada at the age of 12, said the CFTC’s “complaint appears to contain an incomplete recitation of facts, and we do not agree with the characterisation of many of the issues alleged”. — Chris Prentice, with Tom Wilson and Elizabeth Howcroft, (c) 2023 Reuters