On November 21, 2023 in Seattle, Washington, Binance Holdings Ltd. (Binance), the world’s largest crypto exchange, and its CEO, Changpeng Zhao, entered felony guilty pleas in connection with Bank Secrecy Act and other criminal violations. In one of the largest corporate resolutions ever, Binance agreed to pay over $4.3 billion to the U.S. Department of Justice (DOJ) to settle charges that it engaged in anti-money laundering (AML), unlicensed money transmitting, and sanctions violations. Binance’s founder and CEO, Changpeng Zhao, waived indictment and pled guilty to willfully violating the BSA, agreed to pay a $50 million fine, and to step down from his role as CEO. As part of the plea agreement, Binance has also agreed to retain an independent compliance monitor and enhance its AML and sanctions compliance programs. Binance and Zhao have also separately reached agreements with the U.S. Commodity Futures Trading Commission (CFTC), Financial Crimes Enforcement Network (FinCEN), and Office of Foreign Asset Control (OFAC), and the DOJ will credit approximately $1.8 billion toward those resolutions.
As part of its settlement with the CFTC, Binance will disgorge $1.35 billion of ill-gotten gains and pay a $1.35 billion civil monetary penalty. Zhao has also agreed to pay a $150 million civil monetary penalty to the CFTC, but will be credited for the fine imposed on him by the DOJ, thus reducing the amount to $100 million. Binance's former chief compliance officer, Samuel Lim, has also agreed to pay $1.5 million to the CFTC for ignoring potential money laundering and terrorist financing on its platform and for failing to register with the regulator.
FinCEN’s settlement agreement assesses a civil money penalty of $3.4 billion, imposes a five-year monitorship, and requires significant compliance undertakings, including to ensure Binance’s complete exit from the United States. OFAC’s settlement agreement assesses a penalty of $968 million and requires Binance to abide by a series of robust sanctions compliance obligations, including full cooperation with the monitorship overseen by FinCEN. To ensure that Binance fulfills the terms of its settlement — including that it does not offer services to U.S. persons — and to ensure that illicit activity is addressed, Treasury will retain access to books, records, and systems of Binance for a period of five years through a monitor. Failure to live up to these obligations could expose Binance to substantial additional penalties, including a $150 million suspended penalty.
Sentencing for Zhao is scheduled to take place on February 23, 2024.