This is an important week for crypto exchanges and the US government.
Changpeng Zhao, also known as “CZ,” the founder and CEO of Binance, plans to resign and plead guilty to violations of US anti-money laundering requirements brought by the Department of Justice, according to a new Wall Street Journal report.
Zhao is expected to appear in a federal court in Seattle on Tuesday afternoon and enter his plea. Binance is also expected to pay a fine of $4.3 billion. The DOJ is hosting a press conference at 3:00pm EST and is expected to discuss the Binance suit further.
The crypto exchange did not respond to multiple requests for comment from TechCrunch on the charges.
Binance was launched in June 2017 and within 180 days became the largest crypto exchange in the world. It had over $11.6 billion in trading volume in the last 24-hours, 515% higher than the $1.9 billion trading volume from the second largest crypto exchange, Coinbase, according to CoinMarketCap DATA.
This comes less than a day after the SEC charged Krakenthe third largest crypto exchange by trading volume, which allegedly operates as an “unregistered securities exchange, broker, dealer and clearing agency.”
Separately, in February, Kraken agreed to end crypto staking services for US clients and settled a previous SEC lawsuit after agreeing to pay $30 million in compensation for “disgorgement, prejudgment interest and civil penalties.”
The DOJ’s charges against Binance come five months after the US Securities and Exchange Commission accused the exchange and Zhao of lying to regulators about its operations, filing 13 charges against defendants in federal case. Zhao and Binance are said to be “closely involved” in managing the business operations of the trading entity and providing crypto-related services on the Binance.US platform, which it claims is an independent exchange in the SEC filing.
In late March the US Commodity Futures and Trading Commission also filed charges against Binance, Zhao and its Chief Compliance Officer Samuel Lim for allegedly violating rules on trading and derivatives.
Binance was in the headlines last year for various reasons such as Zhao’s comments that contributed to the collapse of FTX, which was once one of the leading competitors. In April, Binance.US, its American sister company, cut a $1.3 billion deal to buy crypto broker Voyager Digital’s assets due to a “hostile and uncertain regulatory climate.”
In August, Checkout.com cut ties with Binance over concerns about the crypto firm’s alleged issues with anti-money laundering, sanctions and compliance controls. At the time, Binance’s spokesperson said it disagreed with “Checkout’s alleged grounds for termination and is considering our options for legal action.”