Latest Global News | Binance’s Zhao to plead guilty, step down to settle US illicit finance probe

NEW YORK, Nov 21 (Reuters) – Binance chief Changpeng Zhao will step down and plead guilty to breaking criminal U.S. anti-money laundering laws as part of a $4 billion settlement resolving a years-long probe into the world’s largest crypto exchange, prosecutors said on Tuesday.

The deal with the Justice Department, detailed in court filings, is part of a large settlement between the firm and other U.S. agencies, including the Commodity Futures Trading Commission (CFTC) and the Treasury Department, according to two sources familiar with the matter.

The agreement will resolve criminal charges for conducting an unlicensed money transmitter business, conspiracy and breaching sanctions regulations, the filing said.

The company will pay $1.81 billion within 15 months, and a further $2.51 billion forfeiture as part of the deal with the Justice Department, prosecutors said. Zhao will personally pay $50 million.

Zhao’s plea agreement also bars him from all involvement with Binance. His plea hearing was scheduled for 10:45 a.m. Pacific Time (1:45 p.m. ET) in Seattle.

Binance’s former chief compliance officer Samuel Lim will also be charged as part of the settlement, a source said, adding Binance will also be required to remediate its lapses.

Lawyers for Zhao and Binance, as well as a company spokesperson, did not respond to calls for comment. Neither Lim nor his lawyers immediately responded to requests for comment.

Binance has been under the Justice Department’s scrutiny since at least 2018, Reuters reported last year, just one of a string of legal headaches it faces in the United States.

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.

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.

Lim, a Singaporean, “explained to a colleague that terrorists usually send ‘small sums’ as ‘large sums constitute money laundering’,” the CFTC said in its March lawsuit.

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 characterization of many of the issues alleged.”

Reporting by Chris Prentice and Jonathan Stempel in New York and David Lawder in Washington; Additional reporting by Tom Wilson and Elizabeth Howcroft in London; Editing by Michelle Price and Lisa Shumaker

Our Standards: The Thomson Reuters Trust Principles.

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Chris Prentice reports on financial crimes, with a focus on securities enforcement matters. She previously covered commodities markets and trade policy. She has received awards for her work from the Society for Advancing Business Editing and Writing and the Newswomen’s Club of New York.