NEW YORK, Nov 21 (Reuters) – Binance chief Changpeng Zhao will resign and plead guilty to violating U.S. anti-money laundering laws as part of a $4 billion settlement that resolves a year-long investigation into the world’s largest crypto exchange, prosecutors said. on Tuesday.
The deal with the Justice Department, detailed in the lawsuits, is part of a larger settlement between the firm and other U.S. agencies, including the Commodity Futures Trading Commission (CFTC) and the Treasury Department, according to two sources familiar with the matter.
The agreement will resolve criminal charges of operating an unlicensed money transmitter business, conspiracy and violating sanctions provisions, the suit said.
The company will pay $1.81 billion within 15 months and an additional $2.51 billion in forfeiture as part of the deal with the Justice Department, prosecutors said. Zhao will personally pay $50 million.
Zhao’s plea agreement also excludes him from any involvement with Binance. His court appearance was scheduled for 10:45 a.m. Pacific Time (1:45 p.m. ET) in Seattle.
Binance’s former chief compliance officer Samuel Lim will also be charged as part of the settlement, said a source, adding that Binance will also be required to remedy its lapses.
Attorneys for Zhao and Binance, as well as a company spokesman, did not respond to calls for comment. Neither Lim nor his lawyers immediately responded to requests for comment.
Binance has been under Justice Department scrutiny since at least 2018, Reuters reported last year, just one of a number of legal headaches it faces in the United States.
Federal prosecutors at the agency asked the company in December 2020 to provide internal records about its anti-money laundering efforts, along with communications involving Zhao, who founded the company in 2017.
The CFTC filed civil charges against Binance in March, alleging that it had not implemented an effective anti-money laundering program to detect and prevent terrorist financing.
Internally, Binance officers and employees acknowledged that the platform facilitated “potentially illegal activities,” the CFTC alleged.
In February 2019, Binance’s former Chief Compliance Officer Lim received information about transactions from the militant Palestinian group Hamas about Binance, the CFTC wrote.
Lim, a Singaporean, “explained to a colleague that terrorists usually send ‘small amounts’ as ‘large amounts constitute money laundering,'” the CFTC said in its March lawsuit.
Zhao, a billionaire who was born in China and moved to Canada at age 12, said the CFTC’s “complaint appears to contain an incomplete recitation of the facts, and we do not agree with the characterization of many of the alleged problems.”
Reporting by Chris Prentice and Jonathan Stempel in New York and David Lawder in Washington; Additional reporting by Tom Wilson and Elizabeth Howcroft in London; Editing by Michelle Price and Lisa Shumaker
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