By Binance CEO Changpeng “CZ” Zhao Resigns and Pleads Guilty – What’s Going On?
Changpeng Zhao, the co-founder and CEO of Binance, has pled guilty to violating criminal U.S. anti-money laundering requirements and will forfeit his executive position at the crypto exchange.
Expected to appear in Seattle federal court on Tuesday afternoon, Zhao (commonly known as CZ) will additionally plead guilty to a currently unannounced criminal charge and be forced to pay over $4.3 billion in fines, according to a report by The Wall Street Journal.
The founder and CEO will be able to maintain his majority ownership of Binance, and the agreement is expected to allow the exchange to continue its operations.
Trouble in paradise
Founded in 2017, Binance has since faced numerous regulatory issues, including a lawsuit from the US Securities and Exchange Commission that accused the company of violating federal securities law, misusing investor funds, and operating as an unregulated exchange.
Gary Gensler, Chair of the US Securities and Exchange Commission, stated that Zhao and Binance as a whole “engaged in an extensive web of deception, conflicts of interest, lack of disclosure, and calculated evasion of the law.”
“The SEC’s aggressive attempts to cripple our industry and the resulting impacts on our business have real-world consequences for American jobs and innovation, and this is an unfortunate example of that,” Binance US said of the lawsuit.
Resignations, layoffs, and more
A number of senior executives at the crypto exchange have left the company in recent months, including Chief Risk Officer, Sidney Majalya, Head of Legal, Krishna Juvvadi, and the firm’s President and CEO, Brian Shroder.
Similarly, The Wall Street Journal reported that Binance laid off over 1,000 employees earlier this year following increased regulatory scrutiny.
The Department of Justice’s settlement with Zhao would mark the end of a years-long legal saga that began in 2018.
Zhao’s exit would signal a massive shakeup for the company’s overall organizational structure, with no current interim CEO announced.
“There could be big changes in terms of the operational side if there’s going to be a new CEO,” Crypto expert and contributing writer, Jacob Bury, said in a recent YouTube video.
SBF and CZ’s crypto empires topple under regulatory pressure
Binance’s main competitor, FTX, collapsed in November of 2022, thanks in large part to a tweet by Zhao stating that he would liquidate his company’s remaining FTT following “recent revelations.”
Earlier this month, FTX founder, Sam Bankman-Fried, was convicted on seven different fraud charges as part of a scheme that saw the doomed crypto exchange misappropriate over $8 billion in customer funds. Zhao and Bankman-Fried were widely known to have a longstanding rivalry.
The Department of Justice will hold a press conference at 3:00 pm EST to further address the news of Zhao’s plea.
It is currently unclear when Zhao’s sentencing will take place.
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