Binance CEO CZ steps down, plead guilty to US charges
Changpeng Zhao, widely known as “CZ,” is set to resign as CEO of Binance as part of a plea agreement with the U.S. Department of Justice, according to court documents. Zhao will plead guilty to charges involving violations of the Bank Secrecy Act, accepting a $50 million fine as part of his plea.
In a broader scope, Binance itself will plead guilty to several counts, including operating an unlicensed money transmitting business and violating sanctions by providing services to Iran without the necessary U.S. authorization. The company has agreed to cooperate fully with the government regarding the conduct outlined in the agreement and will face a substantial financial penalty, including a $1.8 billion fine and a forfeiture of $2.5 billion.
“Defendant Binance has accepted the resignation of Zhao, its CEO, and prohibited him from any present or future involvement in operating or managing Defendant’s business. This prohibition begins as of plea acceptance and ends three years from the date a monitor is appointed,” the filing read.
This development has had an immediate impact on Binance’s cryptocurrency, with the BNB token dropping by 7.2% following the news. The DOJ’s investigation into Binance, which also involves other executives, has been ongoing since 2018 and is being conducted by several prosecutorial bodies including the Money Laundering and Asset Recovery Section and the National Cryptocurrency Enforcement Team.
Internally, discussions at Binance had touched on the possibility of Zhao stepping down, a move some executives believed might improve the company’s prospects amid its legal challenges. Beyond the DOJ’s investigation, Binance has faced regulatory scrutiny related to U.S. sanctions on Russia, which led to the sale of its Russian entity to CommEX in September.
The settlement with the DOJ comes at a time when Binance is navigating a series of regulatory hurdles in the U.S. and Europe, including an exit from the Netherlands due to failed regulatory approval, deregistration in Cyprus, and an ongoing investigation in France. The plea agreement and Zhao’s departure signal a pivotal moment for the company as it contends with these wide-ranging legal and regulatory issues.
“CZ stepping down from Binance is a strong signal of the maturity of the crypto market, where, in contrast to the wild-west stereotype, those who operate outside certain parameters will now be held accountable. Even more importantly, a succession at Binance would show that the largest crypto operations have a solid continuity plan and are not dependent on any one person. CZ may have been the person to grow Binance to the behemoth that it is, but Binance can thrive even more under new leadership,” said Greg Moritz, COO at crypto hedge fund AltTab Capital.
The DOJ has been probing Binance over concerns related to money laundering and sanctions violations. Binance faced legal action from the CFTC earlier this year, and the SEC filed civil charges against Binance-related entities and Zhao in June. The SEC’s allegations centered on deceptive practices, conflicts of interest, and evasion of legal responsibilities.
The US Department of Justice’s national security division also investigated whether Binance or its executives violated US sanctions related to Russia’s annexation of Crimea and interference in Ukraine. This probe was separate from the ongoing inquiry by the DOJ’s criminal division into Binance’s compliance with anti-money laundering and tax laws.