Binance co-founder and CEO Changpeng Zhao, popularly known as CZ, has agreed to step down from his role at the exchange on Tuesday, per reports. This is coming as the United States Department of Justice (DOJ) prepares to announce that it’s secured a $4.3 billion settlement with the world’s largest crypto exchange, Binance.
Per Bloomberg, Changpeng Zhao intends to plead guilty to several charges levied by the DOJ. He’s scheduled to appear in a federal court in Seattle Tuesday afternoon, where he will enter his plea The report also indicates that he will plead guilty to “one criminal charge.”
Although the deal would allow him to retain his majority stake in the crypto exchange, he won’t be allowed to exert executive control at the company.
More info on Changpeng Zhao’s resignation
Chaopeng Zhao will plead guilty to criminal charges related to violating United States anti-money-laundering laws as part of a broad settlement with the U.S. Department of Justice.
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The plea deal with federal prosecutors, which would be accompanied with a $4.3 billion fine on Binance itself, would allow a path for the crypto exchange to continue without its charismatic founder running operations, per multiple reports.
The agreement with the U.S. Department of Justice and other U.S. regulators is expected to be announced by Attorney General Merrick Garland at a press conference in Washington at 3 p.m. ET.
Binance regulatory hurdles
The expected deal with the United States Department of Justice would bring to a close a years-long probe into the crypto exchange.
In March, the Commodity Futures Trading Commission (CFTC) filed a lawsuit against the crypto exchange and Zhao, alleging they went to great lengths to do business with United States customers while not following the country’s regulations. The suit spelt out a litany of alleged offences that harkened back to the wild west days of cryptocurrencies where no rules applied, despite Binance claiming it was playing by the rules.
The suit said the firm had built several methods to allow customers in the United States to do business on their exchange, but did little to comply with United States financial regulations.
Following that, in June, the Securities and Exchange Commission filed its own lawsuit against Binance, alleging that a separate United States trading operation the exchange created strictly for American customers that was in line with United States regulations, was all a hoax that continued to allow United States customers to trade on the much more loosely regulated overseas exchanges.
The suit basically said the company was avoiding all kinds of regulatory scrutiny. This took a toll on Binance as many top executives resigned from the exchange.
Related post: 2 more high-ranking executives exit Binance
What is next?
Although Binance hasn’t put out an official statement about this development, Forbes has said longtime executive, Richard Teng is being considered to take over from CZ.
Teng is currently the company’s head of regional markets outside the United States. and previously led the company’s operations in Europe and Asia. Sources close to the discussions told Forbes that Teng is a leading candidate, though conversations are ongoing and the situation could change.
Per Forbes, the company is also preparing to announce members of a new board to oversee its governance. It will also submit to a US-based third-party monitor as part of the settlement, according to people familiar with the matter.
This is a developing story, and further information will be added as it becomes available.
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