Binance, the largest cryptocurrency exchange in the world, agreed to pay more than $4 billion in settlements with several U.S. law enforcement agencies after years of investigations uncovered (PDF) widespread criminal use of the platform.
In addition to the settlement, Binance CEO Changpeng Zhao pled guilty to several charges in federal court in Seattle on Tuesday. On social media, Zhao said he was stepping down as CEO, and during a press conference U.S. Justice Department officials said his removal was part of their agreement with the company.
Attorney General Merrick Garland and Secretary of the Treasury Janet Yellen told reporters Binance knew and actively sought out business from sanctioned countries, terrorist groups and online marketplaces used by cybercriminals.
“Binance turned a blind eye to its legal obligations in the pursuit of profit. Its willful failures allowed money to flow to terrorists, cybercriminals, and child abusers through its platform,” Yellen said.
The Treasury Department said the platform was used by groups like Hamas’ Al-Qassam Brigades, Palestinian Islamic Jihad (PIJ), Al Qaeda, and the Islamic State of Iraq and Syria (ISIS) — as well as ransomware attackers, money launderers, and other criminals.
It facilitated trades between U.S. users and people in sanctioned countries like Iran, North Korea, Syria, and the occupied Crimea region of Ukraine.
“Between August 2017 and April 2022, there were direct transfers of approximately $106 million in bitcoin to Binance.com wallets from Hydra… a popular Russian darknet marketplace, frequently utilized by criminals, that facilitated the sale of illegal goods and services,” Garland said, noting that the platform only stopped processing the transfers after Hydra was shut down by German and U.S. authorities last April.
“From February 2018 to May 2019, Binance processed more than $275 million in deposits and $273 million in withdrawals from Bestmixer,” a large cryptocurrency anonymizing service that was shut down on money laundering charges.
Binance will now pay one of the largest corporate penalties in U.S. history, according to Garland, after pleading guilty to several violations of U.S. financial law — most notably for failing to prevent money laundering and for failing to prevent U.S. customers from conducting transactions with customers in sanctioned jurisdictions.
Interesting reporting from Reuters on this that says this was, essentially, a best case scenario for CZ, where he still has a major stake in Binance and the company is taking a manageable hit. Seems like it may have to due with the difficulty (and bargaining) of getting CZ to the US from the U.A.E. which doesn’t have an extradition treaty with the US.