Binance’s Founder, Head of World’s Largest Crypto Exchange, Admits to Anti-Money Laundering Offense

Binance’s Founder, Head of World’s Largest Crypto Exchange, Admits to Anti-Money Laundering Offense

The founder of Binance, the world’s largest cryptocurrency exchange, has pleaded guilty to a felony charge of failing to prevent money laundering, while the company itself has agreed to pay more than $4 billion following a U.S. government investigation. CEO Changpeng Zhao admitted to one count of failure to maintain an effective anti-money-laundering program in federal court in Seattle. This plea comes as part of an agreement between Binance and the U.S. government, with a person familiar with the deal confirming the amount on the condition of anonymity.

The charge brought against Zhao is reminiscent of similar practices that were uncovered following the collapse of FTX, the second largest cryptocurrency exchange, last year. Zhao’s sentencing has been scheduled for February 23, but it is likely to be delayed as both sides have agreed to no sentencing for at least six months.

Previously, Zhao had faced allegations of diverting customer funds and concealing the commingling of billions of dollars in investor assets, which were then sent to a third party owned by Zhao himself. Binance has also faced accusations of operating as an unregistered securities exchange and violating U.S. securities laws.

The cryptocurrency industry has been plagued by scandals and market downturns, exemplified by the recent conviction of Sam Bankman-Fried, the founder of failed cryptocurrency brokerage FTX, for fraud. Bankman-Fried was found guilty of stealing at least $10 billion from customers and investors.

Changpeng Zhao, often viewed as Bankman-Fried’s chief rival in the cryptocurrency industry, had initially maintained a friendly competition with him. Binance even invested in FTX when Bankman-Fried launched the exchange in 2019. However, their relationship soured over time, leading Changpeng to announce in November 2022 that he was selling all his cryptocurrency investments in FTX. FTX subsequently filed for bankruptcy.

During Bankman-Fried’s trial and in subsequent public statements, he attempted to place blame on Binance and Changpeng for allegedly orchestrating a run on FTX. In October, Bankman-Fried was found guilty of wire fraud and several other charges. He is expected to be sentenced in March, potentially facing decades in prison.

Note: This article has been rewritten for clarity and brevity. The original article was published by the Associated Press and was written by Fatima Hussein.