Largest crypto exchange fined $4b

WASHINGTON — Changpeng Zhao, chief executive of the world's largest crypto exchange Binance, has pleaded guilty on Tuesday to US money laundering violations, in a deal that will see the cryptocurrency exchange he founded pay over $4 billion in penalties.

"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 US history," Attorney General Merrick Garland said.

Binance's guilty plea is part of a coordinated action, including with the Treasury Department's Financial Crimes Enforcement Network and the Office of Foreign Assets Control, or OFAC, the Department of Justice said.

Zhao pleaded guilty to failing to maintain an effective anti-money laundering program, the Department of Justice said. Zhao has resigned from his position of chief executive.

Zhao, who is Canadian and lives abroad, entered his plea in person in the United States, Garland said.

Court documents showed that Zhao agreed to pay a $50 million fine as part of the plea.

Binance's agreements with the Treasury Department's agencies include a civil money penalty of $3.4 billion and a $968 million penalty involving OFAC. These mark the agencies' largest settlements in history.

"Binance turned a blind eye to its legal obligations in the pursuit of profit," Treasury Secretary Janet Yellen said in a statement.

She noted that Binance "deliberately undermined its own sanctions monitoring controls", allowing over 1.5 million virtual currency trades to violate US sanctions, she said.

Suspicious reports

Moving forward, Binance must file suspicious activity reports required by law, on top of reviewing past transactions to report such activity to authorities, Garland said.

Binance was created in 2017 and cornered much of the crypto trading market.

Binance runs crypto exchanges and provides other services worldwide, but it has taken a severe hit since crypto markets collapsed and regulators began probing the legality of its business.

Zhao, often seen as the archrival of the disgraced FTX founder Sam Bankman-Fried, is expected to face sentencing later.

With the deal, Zhao is barred from involvement in operating Binance's business for now.

In a statement, Binance conceded that it "made misguided decisions along the way" as it grew rapidly in an industry that was in the "early stages of regulation".

In a social media announcement, Zhao said: "I must take responsibility."

The crypto industry surged in 2021 with a range of complex products and celebrity endorsements, propelling it to a valuation in excess of $3 trillion last year.

Agencies Via Xinhua