Justice Department charges Binance, CZ

According to a report from the Wall Street Journal, Binance founder and CEO Changpeng “CZ” Zhao will step down and plead guilty to charges in a federal court in Seattle on Tuesday. The company also has agreed to pay $4.3 billion in fines.

In a separate plea agreement, Zhao agreed to pay a $50 million fine. Binance will appoint an independent compliance monitor, with Zhao prohibited from any involvement with Binance for three years after the monitor is implemented.

The 32-page complaint includes three counts related to money laundering, conducting an unlicensed money-transmitting business, and sanctions violations. It includes wide-ranging allegations of Binance pursuing U.S. customers at the direction of Zhao while not complying with U.S. anti-money laundering and know-your-customer laws, as well as servicing customers in countries with sanctions restrictions, including Iran.

According to a report from Reuters, Binance will pay $3.4 billion to the Treasury’s Financial Crimes Enforcement Network office and $968 million to the Treasury’s sanction unit.

The Justice Department lawsuit, which follows months of speculation that the agency had Binance in its crosshairs, comes after the Securities and Exchange Commission sued Binance in June, alleging the exchange broke securities law and mishandled customer assets. That came eight months after civil charges were filed by the Commodity Futures Trading Commission.

Although the exchange’s former chief strategy officer, Patrick Hillmann, told the Journal in February that Binance expected to pay monetary penalties to settle its investigations, the Justice Department will also file criminal charges against Zhao, according to new reporting from the Journal.

A spokesperson for Binance didn’t immediately respond to a request for comment.

After Zhao, a former software developer for Bloomberg, founded Binance in 2017, it skyrocketed toward becoming the world’s largest crypto exchange. With rapid success came growing pains, as the company struggled to implement know-your-customer and money laundering provisions. Lengthy complaints from the SEC and CFTC detailed prioritizing profit over compliance, with Binance even pushing VIP customers in the U.S. to use its global platform, despite it being prohibited domestically.

While Binance has made a public push to come into compliance in recent years, including hiring former Drug Enforcement Agency and Gemini veteran Noah Perlman as chief compliance officer, the exchange has not been able to shed its reputation for skirting the rules.

The Justice Department charges represent a culmination of the company’s failure to change minds in the U.S., and a possible end of its operations in a country increasingly hostile toward crypto.

With Zhao expected to step down, the question of his successor remains open. Forbes reported that Richard Teng, currently the head of regional markets outside the U.S., is being considered as a top contender for the position.

The price for BNB, the Binance blockchain’s native token, spiked after news of a settlement first leaked, although it has fallen from a high of $270 to around $240 as of 1:15 pm ET.