On November 21, Eastern Time, the U.S. Department of Justice held a press conference to announce the settlement with Binance. U.S. Attorney General Merrick Garland, U.S. Treasury Secretary Janet Yellen, Deputy Attorney General Lisa Monaco, and CFTC Chairman Rostin Behnam attended the meeting.
Binance was charged with three counts, including money laundering violations, conspiracy to conduct an unlicensed money transmission business, and violations of U.S. sanctions, with the core of the charges facing Binance focusing on anti-money laundering violations.
U.S. Attorney General Merrick B. Garland said that the Binance platform is crowded with criminals from all over the world who use Binance to transfer various illegal funds and other criminal proceeds through cryptocurrencies.
The U.S. Treasury Department said Binance’s violations included failing to prevent and report suspicious transactions with terrorists, including Hamas, Palestinian Islamic Jihad, al-Qaeda and the Islamic State in Iraq and Syria. Court documents show that Binance allowed at least 1.1 million related transactions, totaling more than $898 million, involving Iranian customers.
According to the settlement agreement, Binance will pay a criminal fine of $1.8 billion and forfeit $2.5 billion. The total fine is $4.3 billion, of which $3.4 billion will be paid to the Financial Crimes Enforcement Network of the U.S. Treasury Department and another $968 million will be paid to the Treasury Department's sanctions department. This is the largest fine ever imposed by the U.S. Treasury Department.
In addition, Binance founder Zhao Changpeng (CZ) agreed to resign and pay a $50 million fine. He could face up to 10 years in prison, but the specific sentence has not yet been determined. According to reports, Zhao Changpeng's lawyer said his sentence will be postponed for 6 months, and his settlement agreement includes giving up the right to appeal, but only if his sentence does not exceed 18 months.
As part of the settlement, Binance will completely exit the U.S. market. However, Binance’s U.S. subsidiary, called Binance.US, will continue to operate in the U.S. as it is an independent registered money service business and is not affected by Binance’s exit.
In addition to the fine, Binance will have to appoint an independent compliance monitor to report its compliance work to the U.S. government over the next three years. Zhao Changpeng is banned from any operations or management of Binance, and the ban will be lifted after the monitor's term of office expires three years later.
In addition, the Treasury Department will retain access to Binance's books, records, and systems for five years to ensure that it complies with the terms of the settlement. If Binance fails to meet its obligations, it may face additional penalties, including a suspended fine of $150 million, to be collected by the Treasury Department's Financial Crimes Enforcement Network (FinCEN), if Binance fails to comply with the required compliance commitments and regulatory terms.
CZ seemed to be prepared for such an outcome. In an open letter, he stated that he had resigned as CEO of Binance, saying that this was the right thing to do. He was willing to take responsibility for the mistakes he made and announced that Binance appointed Richard Teng as the new CEO.
Richard Teng is a 52-year-old Singaporean with a Master's degree in Applied Finance from the University of Western Australia. Prior to joining Binance, he worked at the Monetary Authority of Singapore for 13 years and served as Chief Regulatory Officer at the Singapore Stock Exchange (SGX) for nearly 8 years, responsible for the formulation of rules, frameworks and policies for listing, trading and clearing. After that, he served as the head of the Financial Services Regulatory Authority of the Abu Dhabi Global Market for 6 years. Due to his more than 20 years of experience in financial services and regulation, Richard Teng is considered an ideal candidate to help Binance cope with regulatory difficulties.
Subsequently, the incoming CEO Richard Teng also tweeted that he was honored to be the CEO of Binance and promised to continue to meet the expectations of stakeholders while achieving Binance’s core mission.
In the accusation, Binance was not mentioned to have misappropriated user funds or manipulated the market, which also confirmed its previous commitment to user funds. CZ also mentioned on Twitter, I am proud to point out that in the settlement reached with US regulators, they did not accuse Binance of misappropriating any user funds, nor did they accuse Binance of participating in any market manipulation, and the funds are still safe.
Binance officials also released a report saying, “Today we are pleased to inform that we have reached a solution with the U.S. Department of Justice, the Commodity Futures Trading Commission, the Office of Foreign Assets Control, and the Financial Crimes Enforcement Network regarding their investigations into historical registration, compliance, and sanctions issues. These solutions acknowledge our company’s responsibility for historical violations of criminal compliance and allow our company to open a new chapter of learning and growth that is both challenging and transformational. It is worth noting that in our settlement with U.S. agencies, they did not accuse Binance of misappropriating any user funds, nor did they accuse Binance of engaging in any market manipulation.”
Summarize
Today, the iron fist of the United States has finally officially landed on Binance. The huge fine of more than 4 billion US dollars faced by Binance has sent a strong signal to the entire cryptocurrency industry, indicating the determination of regulators to ensure industry compliance and crack down on illegal activities. Although this fine may have a negative impact in the short term and is a painful price for Binance and the entire industry, from a longer-term perspective, it is expected to drive the cryptocurrency industry towards a more standardized and compliant direction, laying the foundation for the sustainable development of the industry.
