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Binance chief Changpeng Zhao pleads guilty to money laundering

Changpeng Zhao, founder of the world’s largest crypto exchange, pleaded guilty to federal money laundering on Tuesday afternoon and has agreed to step down as chief executive of Binance, which will pay a $4.3 billion fine, according to court documents.

As part of the plea agreement, Zhao is barred from working with the exchange for three years, according to a court filing dated Nov. 20. He appeared in federal court in Seattle on Tuesday, local news organizations reported, and according to the court filing will be fined $50 million.

The deal ends the Department of Justice’s three-year investigation of Binance and comes months after the firm was accused by regulators of operating as an unregistered securities exchange.

Zhao’s departure marks the end of an era for one of the crypto industry’s longest standing titans, who for years sparred with regulators en route to Binance becoming the largest crypto exchange in the world. Zhao was also an original investor in FTX, the beleaguered crypto exchange founded by Sam Bankman-Fried, who was convicted at trial of seven counts of fraud and money laundering earlier this month.

“Today, I stepped down as CEO of Binance,” Zaho said in a lengthy post on X, formerly Twitter, that did not mention his guilty plea but said that Richard Teng, the firm’s former Global Head of Regional Markets, had been named chief executive. “I made mistakes, and I must take responsibility. This is best for our community, for Binance, and for myself.”

Court papers filed by the government say that Binance chose not to implement anti-money laundering measures, essentially allowing the firm to become a clearinghouse for all manner of illicit financial transactions. Between 2018 and 2022, that led to nearly $900 million in financial transactions that violated sanctions against Iran, the court papers charge.

In June, the Securities and Exchange Commission came after Binance and Coinbase, another crypto exchange, asking Binance to freeze all assets on its U.S. platform and accusing Coinbase of acting as a securities exchange, broker and clearing agency.

The plea deal is the latest victory in the Securities and Exchange Commissions’s effort to rid bad crypto actors from the United States, said Carl Tobias, a law professor at the University of Richmond.

“Especially after what they did in the Southern District of New York with the other big crypto story this year,” he said, referring to the trial of Bankman-Fried.

This is developing story. It will be updated.

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