Binance CEO CZ Steps Down Amid $4.3 Billion Criminal Fine
23 Nov 2023 by Rory Kejzekro 3 min read
Binance CEO CZ Steps Down Amid $4.3 Billion Criminal Fine

In what many may see as the biggest crypto takedown since that of FTX’s Sam Bankman-Fried (SBF), Binance’s notorious founder Changpeng ‘CZ’ Zhao has resigned from his CEO position amid a US Government indictment.

As of today, CZ has been released from custody on $175 million bond after being charged with crimes relating to conspiracy, conducting unlicensed money, transmitting business, and violating the International Emergency Economic Powers Act. 

As per a court filing from Tuesday 21st November - and as the above charges suggest - such turn of events unfolded alongside CZ’s Binance being accused of failing to maintain a proper anti-money laundering program, whilst operating an unlicensed money-transmitting business and violating sanctions law. 

In practice, Binance’s crimes relate to its allowance of serving thousands of users in sanctioned countries, and allowing them to transact with US users despite knowing that it’s violating US laws. Per the US Government, the platform’s laissez-faire approach to monitoring its global usage even included allowing the likes of ISIS, Al-Qaeda, and Hamas to use its services.  

In turn, CZ has pleaded guilty to violating the Bank Secrecy Act and causing a financial institution to violate the BSA (per another court filing). This now means that he must pay a $50 million personal fine, whilst Binance must put forward a $4.3 billion sum - one of the largest penalties ever obtained from a corporate defendant. 

Additionally - and following in the custodial footsteps of his old crypto foe SBF - CZ could be facing 18 months in prison as part of his plea deal with the US Government.

With CZ stepping down, Richard Teng, a former Abu Dhabi regulator and Binance's regional markets head, is taking over as Binance CEO. Here, Teng will have to contend with the fact that $1.3 billion worth of user funds have already been withdrawn from the platform following the US Government indictment. 

In a response blog post, Binance has acknowledged the ‘resolutions’ that have been made, and that with Teng now at the helm, it’s ‘confident that Binance will emerge as a stronger company as we lay the foundation for the next 50 years’. 

As the company should hope, such success will stem from the fact that it still hosts a reported 150 million users, as well as thousands of employees.

Separately, the US Treasury Department and Commodity Futures Trading Commission have also announced their own respective settlements with Binance. 

And when it comes to the prospect of a CZ return, the US Government has banned the polarising crypto figure from engaging and managing Binance operations ‘any present or future involvement in operating or managing’. That being said, such ban is scheduled to end after a three-year period that’ll involve an independent compliance entity monitoring and reporting Binance’s compliance efforts to the US government.

Once at liberty to do so, CZ has since stated that he may start to engage in passive investing, or become a minority shareholder in projects from different areas of DeFi. 

As you can expect, the crypto community has been quick to react to this latest DeFi scandal, with memes being tweeted in their masses.

In representing a rather concerning rhetoric however - one in which will continue to harm crypto’s reputation in the mainstream - many are dubbing the debacle as the latest edition of the ‘Forbes curse,’ as CZ is now the third dubious entrepreneur to feature on the prestigious magazine’s front cover, alongside Theranos’ Elizabeth Holmes and FTX’s Sam Bankman-Fried. 

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This article is intended for educational purposes and is not financial advice.