Another Giant in World of Crypto Goes Down

Changpeng Zhao of Binance pleads guilty to money-laundering charge, plans to step down as CEO
By Newser Editors and Wire Services
Posted Nov 21, 2023 1:54 PM CST
Another Giant in World of Crypto Goes Down
Binance CEO Changpeng Zhao, in a file photo.   (AP Photo/File)

The founder of Binance, the world's largest cryptocurrency exchange, pleaded guilty Tuesday to a felony charge that he failed to take steps to prevent money laundering following an investigation by the US government. CEO Changpeng Zhao's company also agreed to pay more than $4 billion in fines and restitution. Zhao pleaded guilty in federal court in Seattle, per the AP. Zhao himself will pay a $50 million fine, and he plans to step down as chief executive as part of a deal that could allow Binance, a Cayman Islands limited liability company, to continue operating, per the Wall Street Journal. The charge was similar to practices uncovered after the collapse of the second largest cryptocurrency exchange, FTX, last year.

The judge set Zhao's sentencing for Feb. 23, though that is likely to be delayed. Zhao had previously faced allegations of diverting customer funds, concealing the fact that the company was commingling billions of dollars in investor assets and sending them to a third party that Zhao also owned. It comes months after the company was accused of operating as an unregistered securities exchange and violating a slew of US securities laws in a lawsuit from regulators. Zhou's own net worth is estimated to be $23 billion, per CNN.

The cryptocurrency industry has been marred by scandals and market meltdowns. Sam Bankman-Fried, the 31-year-old founder of the failed cryptocurrency brokerage FTX, was convicted earlier this month of fraud for stealing at least $10 billion from customers and investors. Of his many depictions in the cryptocurrency industry, Changpeng was best known as the chief rival to Bankman-Fried. Changpeng and Bankman-Fried were originally friendly competitors, with Binance investing in FTX when Bankman-Fried launched the exchange in 2019. However, the relationship between the two deteriorated, culminating in Changpeng announcing he was selling all of his cryptocurrency investments in FTX in early November 2022. FTX filed for bankruptcy a week later.

(More cryptocurrency stories.)

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