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Binance Chief Executive Changpeng Zhao pleaded guilty to violating a U.S. bank secrecy law, as federal prosecutors unveiled sweeping charges against the world’s largest cryptocurrency exchange.
Zhao, one of the crypto industry’s most outspoken and influential executives, entered his plea Tuesday in federal court in Seattle and agreed to pay a $50 million fine.
Binance also pleaded guilty to charges including conspiring to knowingly conduct an unlicensed money transfer business and knowingly and willfully causing the export of services to Iran, the Ministry of Defense said. Justice.
Prosecutors alleged the exchange failed to establish an anti-money laundering program and “deliberately caused violations of U.S. economic sanctions.”
The charges alleged that Binance failed to register with the U.S. Treasury as a “money transmission business.” . . in part to prevent regulators from discovering that he facilitated billions of dollars in crypto transactions without implementing appropriate “know your customer” measures.
Binance facilitated transfers between the United States and sanctioned jurisdictions, including Cuba, Syria and Iran, the court document said.
The alleged misconduct occurred at least between August 2017 and October 2022, according to court filings.
These accusations significantly expand the crackdown by US authorities against the crypto sector. The DoJ created a new unit in 2021 focused on the misuse of digital assets as Joe Biden’s administration became one of the jurisdictions with the world’s toughest stance on crypto.
Binance did not respond to multiple requests for comment.
Mark Kornfeld of law firm Buchanan Ingersoll and Rooney said: “The DoJ’s action against the major player in crypto is a very important development for this industry as a whole. This is proof that this is the new normal, and not just a random development for the industry, everyone is pretty well informed that this is how things are going to be.
The Commodity Futures Trading Commission in March accused Binance and Zhao of operating illegally in the United States. The civil complaint alleged that much of the group’s reported trading volume and profitability came from “extensive solicitation and access” to U.S. customers, contradicting the exchange’s claims.
The plea agreements announced Tuesday will also resolve the CFTC’s case, authorities said.
In June, the U.S. Securities and Exchange Commission filed 13 civil charges accusing Binance of violations, including mixing billions of dollars of customer cash with a separate trading company owned by its chief executive and operating exchanges , unregistered brokers and clearing agencies.
Under Zhao’s leadership, the group grew from a modest start-up in the summer of 2017 to a giant with employees in dozens of countries. By November 2022 – days after the collapse of its once fierce rival FTX – Binance controlled more than half of the crypto market.
But under the weight of increasing regulatory scrutiny in 2023, the crypto giant’s grip on power has diminished and now controls around a third of the market.
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