LONDON, Nov 21 (Portal) – The most powerful man in crypto has lost his crown – and could also face having his freedom restricted.
Binance CEO Changpeng Zhao resigned on Tuesday and pleaded guilty to violating U.S. anti-money laundering laws as part of a $4.3 billion settlement to resolve a years-long investigation into the world’s largest crypto exchange , prosecutors said.
The agreement with the Department of Justice, part of a broader settlement between Binance and other US authorities, resolves criminal charges of conducting an unlicensed money transfer business, conspiracy and violating sanctions regulations.
It also leaves Zhao’s future uncertain.
“Today I resigned as CEO of Binance,” tweeted Zhao. “Admittedly, it wasn’t easy to let go emotionally. But I know it’s the right thing to do. I made mistakes and I have to take responsibility.”
Zhao, known as CZ, will personally pay $50 million and is barred from any involvement with Binance.
The U.S. sentencing guidelines call for a prison sentence of 10 to 18 months for the charges against him. Prosecutors are seeking an 18-month prison sentence, The New York Times reported.
Zhao and his lawyers did not return calls seeking comment.
HIGH AMBITIONS
After launching Binance in Shanghai in 2017, Zhao dreamed big. “We want to take over the entire market!” he told employees in a company chat group this year.
The 46-year-old CEO did not let his convictions change when he set up his crypto exchange. Even this year, Zhao felt like a big goal was within reach.
“The idea that a five-year-old startup could mature and operate at the same level as a financial institution that has existed for 200 years was once unimaginable,” Zhao wrote in January in a review of the previous year. “But we’re almost there today.”
In this review, Binance praised its progress in compliance with regulations around the world. The exchange has worked over the year to strengthen customer controls and build the “best security and compliance team” for cryptocurrencies.
Zhao’s public goal of being part of all this was dashed by Tuesday’s guilty plea and plea deal.
“By failing to comply with U.S. laws, Binance made it easy for criminals to transfer their stolen funds and illicit proceeds through its exchanges,” U.S. Attorney General Merrick Garland said Tuesday. “Furthermore, Binance has violated more than just federal law. It acted like it was complying.”
“ZHAO DOESN’T ANSWER ANYONE”
Zhao was born in China before moving to Canada in 1989 at age 12, two months after China’s Tiananmen Square crackdown on pro-democracy protesters, he wrote in a blog last year.
In his search for success, the tycoon traveled the world, working in Tokyo and New York before moving to Shanghai, where he turned to cryptocurrency and founded Binance.
Its expansion was dramatic. Binance became the world’s largest crypto exchange in six months.
Although its market share has declined this year, it still accounts for about half of global crypto trading volume, according to research firm CCData.
From the company’s early days, Zhao had a tight grip on Binance as a powerful leader committed to secrecy and focused on market dominance, a Portal report last year found. As CEO, he maintained control over the smallest operational details while posting social media selfies with city leaders and mayors.
Zhao filled top positions with a close circle of employees, many of whom had worked or studied in China. Co-founder Yi He now heads Binance’s venture capital department as well as other key departments.
As Binance recruited more and more employees from the traditional financial and regulatory world, Zhao’s tight control over his company remained unabated. The company, which describes itself as an “ecosystem,” has established more than 70 entities, most of which are controlled by Zhao personally.
“Zhao answers to no one but himself,” the Commodity Futures Trading Commission wrote in March after suing Binance for running what it called a “sham” compliance program.
It is unclear whether Zhao will now relinquish control of the companies. In the meantime, one of his appointees will take over the management of Binance.
Richard Teng, a senior Binance executive who joined in 2021, is the new CEO, Zhao posted on social media on Tuesday. Teng “will ensure Binance implements our next phase of security, transparency, compliance and growth,” he said.
Reporting by Tom Wilson in London; Editing by Lisa Shumaker and Bill Berkrot
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