“Binance has turned a blind eye to its legal obligations in the pursuit of profit. His deliberate failures allowed money to flow to terrorists, cybercriminals and pedophiles through his platform,” Treasury Secretary Janet Yellen said in a statement. In prepared remarks, Yellen said groups like Hamas’ Al-Qassam Brigades, Palestinian Islamic Jihad and ISIS have all used Binance to conduct transactions.
Most of the transactions alleged to have violated U.S. sanctions programs involved Iran, according to a senior Treasury official.
The $1 trillion-plus crypto market has long been plagued by accusations of fraud. But the Binance settlement – the sanctions imposed by authorities are the largest in history – marks the latest sign that the industry has entered a new era of law and order in the United States.
“The result of these agreements will be an end to corporate behavior that has posed risks to the U.S. financial system, American citizens, and our country’s national security for too long,” Yellen said. “And let me be clear: we are also sending a message to the virtual currency industry more broadly, today and for the future.”
Under the terms of the agreement, Binance will also enter into monitoring and undertake new compliance efforts, including “to ensure Binance’s complete exit from the United States,” the Treasury Department said. The monitor – a first for the crypto market – will give the Treasury access to Binance’s books and records for five years. The senior Treasury official compared it to the supervisory structure imposed on banks following the global financial crisis.
Treasury officials declined to comment on what the settlement means for Binance.US — a separate, smaller crypto exchange owned by Zhao and registered with FinCEN as a money services business.
In a blog post published shortly after the announcement, Binance said the deal would allow it to “emerge as a stronger company as we lay the foundation for the next 50 years.” And while Zhao will no longer have a leadership role, he remains the company’s majority shareholder and “an available resource for consultation on historical areas of our business.”
Zhao admitted he “made mistakes” and “needs to take responsibility” in a post on X, the social media platform formerly known as Twitter. He also announced that Richard Teng, the exchange’s former global head of regional markets, would take over as CEO.
“Binance is no longer a baby. It’s time for me to let him walk and run,” Zhao wrote. “I know Binance will continue to grow and excel with the deep bench it has.”
The United States has accelerated its efforts to rein in the crypto market over the past year, following the fall of Bankman-Fried’s FTX, Binance and Zhao’s former main rival, whose collapse shook Washington and Wall Street. Prosecutors have since prosecuted a number of major crypto executives for fraud, while regulators like the Gary Gensler-led Securities and Exchange Commission have arrested several major crypto companies, including Gemini, Coinbase and, most recently, Kraken for allegedly circumventing market rules.
The CFTC and SEC alleged earlier this year that Binance was, among other things, exploiting the US market without authorization to do so. The SEC case was not part of the settlements unveiled Tuesday.
“Binance’s activities undermined the foundations of safe and sound financial markets by intentionally avoiding the basic and fundamental obligations that apply to exchanges, while collecting approximately $1.35 billion in trading fees from U.S. customers,” said CFTC Chairman Rostin Behnam. “Binance and its executives sought to deceive and indoctrinate their employees and customers, creating a cult based on circumventing their own compliance controls to maximize company profits above all else.”