Binance, world’s largest crypto exchange, to pay $4.3 billion fine as CEO pleads guilty to federal charges

binance, the world's largest cryptocurrency exchange platform, where users around the world buy and sell electronic forms of money, admitted to violating US laws to prevent money laundering and sanctions violations and agreed to pay the government 4.3 billion dollars in fines and fees, the Department of Justice reported. announced on Tuesday. CEO Changpeng Zhao also pleaded guilty to a federal charge.

Binance has been investigated by numerous regulators and law enforcement agencies, including the Commodity Futures Trading Commission. The company acknowledged Tuesday that it did not take adequate steps to prevent money laundering on its platform and that it operated illegally in the United States, allowing traders from countries currently sanctioned by the federal government, such as Iran, to do business with Americans.

The platform's founder and CEO Zhao, a Canadian national, pleaded guilty in federal court on Tuesday to violating anti-money laundering laws and agreed to resign from Binance's leadership. He faces a sentence of approximately 1 to 10 years in prison, with sentencing scheduled for next year.

Zhao tweeted that stepping down as CEO was difficult. "It's true that it wasn't easy to let go emotionally. But I know it's the right thing to do. I made mistakes and I must take responsibility. This is what's best for our community, Binance and me," he posted. . He added that Richard Teng, global head of regional markets, will be the new chief executive.

Federal investigators alleged that the cryptocurrency exchange, which processes billions of dollars in transactions, illegally profited by allowing darknet actors and ransomware hackers to operate on the platform and failed to properly analyze other illicit services.

Between January 2018 and May 2022, prosecutors alleged that Binance processed 1.1 million transactions totaling nearly $900 million between Americans and individuals believed to be in Iran. Zhao and company executives were reportedly aware that exchanging U.S. money would require the platform to follow U.S. sanctions laws, but they also viewed users in the U.S. as vital to growth.

A separate exchange, Binance.US, was created for American cryptocurrency traders to use, but researchers alleged that Americans also remained on the original, unregulated Binance platform.

"The goal of the conspiracy was to allow Binance to operate as a virtual exchange and gain market share and profits as quickly as possible," according to the criminal information to which the company pleaded guilty. The defendants allegedly encouraged high-value clients to "conceal and obfuscate their connections to the United States," according to court documents.

Attorney General Merrick Garland, Treasury Secretary Janet Yellen, Deputy Attorney General Lisa Monaco and other federal officials announced the multimillion-dollar deal Tuesday.

"Binance was allowing illicit actors to transact freely, supporting activities ranging from child sexual abuse to illegal narcotics and terrorism, in more than 100,000 transactions," Yellen told reporters on Tuesday. "That includes transactions associated with terrorist groups such as Hamas' Al-Qassam Brigades, Palestinian Islamic Jihad, Al Qaeda and ISIS."

"Using new technology to break the law does not make you a disruptor," Garland said. "It makes you a criminal."

"Binance became the largest cryptocurrency exchange in the world in part because of the crimes it committed," Garland said. "He is now paying one of the largest corporate sanctions in American history."

Zhao, who founded the company in 2017 and continued to run the platform, appeared in a Seattle court on Tuesday to plead guilty to failing to maintain effective anti-money laundering programs. He admitted to deliberately ignoring certain leak processes from bad actors on his platform and failing to file suspicious activity reports with regulators, according to the criminal information filed Tuesday.

Part of the platform's agreement with the Justice and Treasury Departments includes a provision that Binance will continue to cooperate with U.S. laws, file suspicious activity reports, and appoint a new CEO with compliance experience, according to Justice Department officials.

Binance is still fighting an unrelated lawsuit filed by the Securities and Exchange Commission alleging that the company failed to register in the U.S. and illegally diverted investor funds to an account controlled by Zhao.

Binance did not immediately respond to CBS News' request for comment.

Binance's settlement with the Department of Justice comes just weeks later Sam Bankman-Frito — the founder of another cryptocurrency exchange, ftx – was found guilty of seven counts of fraud, conspiracy and money laundering following the platform's dramatic collapse. He was accused of using FTX funds on real estate and other projects outside the business.

Justice Department officials said Tuesday that they are always monitoring the compliance of cryptocurrency exchanges and emphasized the need for startups and disruptors to prioritize regulations over growing a business.

"A corporate strategy that puts profits before compliance is not a path to riches; it is a path to federal prosecution," Monaco said in a statement.