A federal judge accepted a guilty plea from cryptocurrency exchange Binance along with $4.3 billion in fines and penalties to settle its case—the largest such assessment in the history of federal financial prosecutions.
Federal Judge Richard Jones approved the deal—which includes a criminal fine of $1.8 million and a forfeiture of $2.5 million for a financial penalty for failing to perform required due diligence in delivering its services—late Friday, according to a Reuters report.
“Due in part to Binance’s failure to implement an effective AML program, illicit actors used Binance’s exchange in various ways, including operating mixing services that obfuscated the source and ownership of cryptocurrency,” U.S. Department of Justice prosecutors said in court documents. “Transacting illicit proceeds from ransomware variants; and moving proceeds of darknet market transactions, exchange hacks, and various internet-related scams.”
Prosecutors said the $4.3 billion was the largest penalty imposed on a money services business in the U.S. Justice Department’s history, “one commensurate with the severity of Binance’s criminal conduct,” they said.
“Binance committed serious crimes in a deliberate scheme to grow as quickly as possible—a significant sentence is warranted for these violations,” they explained. “The proposed sentence is appropriate, holds Binance accountable for its criminal acts, and provides necessary deterrence to other criminal actors.”
The eye-popping figure was first floated in November during the company’s early negotiations with federal prosecutors, but the final deal was sealed today by Judge Richard A. Jones of the United States District Court for the Western District of Washington at Seattle.
With the company claims settled, it remains an open question what will become of its founder, Changpeng “C.Z.” Zhao.
Currently, out on a $175 million bond, Zhao’s sentencing on money laundering sanctions violations by the U.S. Department of Justice charges was postponed until April 30. While awaiting his sentencing, Zhao is barred from any present or future involvement in operating or managing business related to Binance.
Prosecutors now want Zhao to surrender his Canadian passport and a minimum of three days’ notice before any travel, CNBC reported today.
Along with admitting guilt and agreeing to pay the hefty penalty, court documents said Binance has agreed to cooperate with the government, enhance its compliance program, and adopt an independent compliance monitor.
Binance has been paying its way out of legal trouble. In December, the U.S. District Court for the Northern District of Illinois approved a settlement between Binance and the U.S. Commodity Futures Trading Commission (CFTC) of $2.7 billion, with Zhao required to pay $150 million personally after being charged with violating the Commodity Exchange Act and other CFTC regulations.
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