Will Binance manage to turn the page on its legal setbacks? The largest cryptocurrency exchange platform in the world signed an agreement with the American justice system on Tuesday, November 21, while the latter had been investigating the company since 2018. Despite this signature, Binance’s admission of guilt for several offenses and the payment of two fines of 3.4 billion and 968 million dollars, the balance of the company is largely weakened.
The CEO and founder of Binance, the Chinese-Canadian Changpeng Zhao, resigned on Tuesday, a condition of the deal signed with the US Treasury. “I made mistakes, and I have to take responsibility for them,” explained the nickname “CZ” on X (formerly Twitter), before announcing the appointment of Richard Teng, former director of markets of the company, to the CEO position. Changpeng Zhao, who himself pleaded guilty when signing the agreement, paid a $50 million fine, according to the New York Times. He could also be sentenced to prison.
Money laundering
The “errors” of CZ and his company were at the heart of the investigations of several US Treasury agencies, responsible in particular for monitoring financial markets: the services thus accused Binance of having violated several US banking regulations, of having failed to its duty to register as a banking company, and to Changpeng Zhao for failing to comply with its anti-money laundering obligations.
The platform would not have sufficiently controlled the identity of registrants, allowing criminal organizations to use its services and carry out online transactions. “Binance turned a blind eye to its legal obligations in order to make a profit, said Treasury Secretary Janet Yellen. Its deliberate failures allowed terrorists, cybercriminals and child molesters to circulate money on its platform “.
65 million dollars in exchanges
Binance, which averages $65 million in daily trades, is a heavyweight in the cryptocurrency space. But its misadventures have already harmed it: the company’s market shares have declined since the beginning of 2023, when the accusations against it were already known, and more than fifteen senior managers have resigned. This could also weaken the entire sector, especially since Binance is not the first cryptocurrency operator to have trouble with the law.
“In recent months, the Department of Justice has successfully prosecuted the leaders of two of the largest cryptocurrency exchange platforms in two separate proceedings,” said Attorney General Merrick B. Garland. At the beginning of November, the former boss of the FTX platform Sam Bankman-Fried was found guilty of seven counts, including fraud and money laundering, after the bankruptcy of his company in 2022.