US Crackdown on Binance Makes CEO Resign

• Binance CEO CZ resigns, pleads guilty, and settles with $4.3 billion amid legal challenges.
• CZ has been released on a $175M personal recognizance bond, with a sentencing hearing set for February 23, 2024.
• Skipping court appearance results in a $250,000 fine and up to 10 years in jail.

The cryptocurrency industry faces another major setback as Changpeng Zhao (CZ), the founder and CEO of Binance, has stepped down and pleaded guilty to breaking US anti-money laundering laws. Further, CZ agreed to the $4.3 billion settlement, which is one of the largest corporate penalties in US history, including a personal payment of $50 million by Zhao. This comes exactly a year after the collapse of the bankrupt crypto exchange FTX. 

What Exactly Happening? 

Late Tuesday, Zhao agreed to plead guilty to charges filed by the Department of Justice. This allegation includes money laundering violations, conspiracy, unlicensed money transmitting, and violating the International Emergency Economic Powers Act. That involved the failure to report over 100,000 suspicious transactions, some with organizations labeled as terrorist groups by the U.S., such as Hamas and al Qaeda.

Following these accusations, Changpeng Zhao has officially resigned as the CEO of Binance, acknowledging his mistakes and expressing a commitment to take responsibility for the benefit of the community and the exchange. Richard Teng, formerly the Global Head of Regional Markets, has been introduced as the new CEO with immediate effect.

Further, the charges carried an 18-month sentence, but Zhao has been released from custody on a $175 million personal recognizance bond. The terms of his release entail depositing $15 million into a trust account managed by Davis Wright Tremaine, committing to penalty funds for any breach of the release conditions, and obtaining two guarantors who will pledge $250,000 and $100,000, respectively. A sentencing hearing is set for February 23, 2024.

In March of this year, when US regulators charged Zhao and Binance Holdings with violating securities laws, Zhao’s response on the online platform was a short “4” – a picture of himself alone. Now this gesture faced criticism, with some speculating whether it hinted at the $4.3 billion fine that would follow, raising questions about whether it all was preplanned.

This marks the second major blow to the crypto industry in less than a year, following the collapse of FTX and the recent fraud conviction of FTX founder Sam Bankman-Fried.

However, despite the turmoil, Binance reassures users that their funds are secure (SAFU). Emphasizing that the allegations “do not include misappropriation of user funds or engagement in market manipulation.” 

Crypto Market Turns Red

Over $99.37 million in user funds have been withdrawn from Binance, causing a 2.5% crash in the global cryptocurrency market cap, in the last 24 hours.

Further, Binance native crypto BNB saw a decline of over 16% from $269 to $225, with current trading at $235. The token’s trading volume has surged by 60%, indicating heightened attention amid the unfolding events. Moreover, the largest crypto, Bitcoin (BTC), also saw a decline of over 3%, dropping from $37,414 to $35,756.

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