Jakarta, CNBC Indonesia – Binance founder and CEO, Changpeng Zhao, resigned and pleaded guilty to violating America’s Anti-Money Laundering Act.
Binance violated those rules and failed to report more than 100,000 suspicious transactions with organizations designated by the US as terrorist groups including Hamas, Al Qaeda, and ISIS.
The deal between Binance and the US Department of Justice requires Zhao to personally pay US$50 million and Binance to pay US$4.3 billion, called by prosecutors one of the largest corporate penalties in US history.
However, some legal experts believe that this deal actually benefits Zhao, because his vast wealth will remain intact. With his abundant wealth, CZ can easily regain control of Binance. Moreover, even though he is no longer the CEO, he still has extraordinary influence on the crypto exchange he founded in 2017.
This case is another blow to the crypto industry, which has been hit by many problems and has been the target of various investigations into alleged fraud, including the conviction of Sam Bankman-Fried, founder of FTX.
Quote ReutersBinance has been under scrutiny from the Department of Justice since at least 2018. This is just one of a series of legal problems it has faced in the United States.
Federal prosecutors asked the company in December 2020 to provide internal records about its anti-money laundering efforts, along with communications involving Zhao.
The CFTC, the US commodities trading regulatory authority, filed a civil suit against Binance in March, accusing it of failing to implement an effective anti-money laundering program to detect and prevent terrorist financing.
Internally, Binance employees acknowledged that the platform facilitated potentially illegal activity.
In February 2019, Binance’s Lim received information about the transactions of the Palestinian militant group Hamas on Binance.
Lim, a Singaporean, explained to colleagues that terrorists usually send small amounts because sending large amounts at once could be detected as money laundering, the CFTC said in its lawsuit in March.
Daniel Silva, a partner at the Buchalter law firm and a former federal prosecutor, said the charges likely support charging Zhao with a harsher sentence such as fraud or money laundering.
“He was at risk of much more serious charges, so this resolution is very favorable to him,” Silva said.
However, guilty pleas involving a company’s CEO are rare and there has been a push by the Justice Department under Democratic leadership to bring charges against executives.
Changpeng Zhao, Co-Founder & CEO, Binance. (Pedro Fiúza/NurPhoto via Getty Images)
“The government plays an important role in issues of individual accountability,” said Kit Addleman, a partner at the Haynes Boone law firm in Dallas.
He noted the size of the fine makes it clear that the US government wants to control the crypto sector, and described the financial magnitude of the deal as surprising.
According to Robert Frenchmann, a legal expert in the field of financial crimes, Zhao got “pretty good results” because the US government had to find a way to get him onto US soil.
“He is still very rich. It is unlikely he will spend too long in a US prison. He still has shares in Binance, a company that has now gone through the biggest legal problems they have ever faced,” said Frenchmann.
According to Jeffrey Cohen, a legal expert from Boston College Law School, prosecutors may have to weigh two things. First, there is the potential that Shizu will never surrender and admit he was wrong. Second, the desire for Binance to pay the maximum fine.
“The fine for the corporation is quite large, even though it must allow the defendant’s sentence to be reduced. This is the US government’s calculation,” said Cohen.calculation,” Cohen said.
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