Government 2, crypto 0.
In what could be a game-changing moment in crypto history, the co-founder and CEO of Binance, the world's largest crypto exchange, has stepped down and pleaded guilty to multiple federal crimes.
As the New York Times reports, the resignation and guilty plea of CEO Chengpeng Zhao, better known as "CZ" within the industry, are part of a deal the bombastic crypto chief has cut with the US Justice Department, Treasury Department, and Commodity Futures Trading Commission, all of which have been investigating the company over money laundering claims for years.
Along with CZ, Binance itself has also pleaded guilty to money laundering and sanctions violations, and has agreed to a whopping $4.3 billion in fines and restitution. Zhao will also be paying a $50 million fine as part of his plea deal, and as the NYT points out, insiders say the Justice Department is keeping the option open to seek a stiffer penalty than the 18-month prison sentence advised under federal sentencing guidelines for crimes of this nature.
This dramatic turn of events is a severe about-face for the company's now-resigned CEO, who until now had resisted internal calls to resign in the aftermath of mass withdrawal events late in 2022 and earlier this year that saw billions of dollars worth of crypto be taken out of the massive exchange over 24-hour time periods.
Zhao's brash assurances that everything was fine in the perennially ablaze room that is the crypto industry included his insistence that the $3 billion mass withdrawal at Binance last December was "very normal market behavior" and that a crypto market crash just a few months prior was "healthy."
As with FTX, this stunning admission of guilt does not necessarily spell the end for Binance. As the NYT reports, the exchange is allowed to stay open so long as it accepts a government-appointed monitor to oversee it — and makes sure that CZ doesn't get involved with the company again for three years.
Although he admitted to having trouble "let[ting] go emotionally" and having "made mistakes," Zhao said in a lengthy paid subscriber tweet on X-formerly-Twitter that he will "remain available to the team to consult as needed, consistent with the framework set out in our US agency resolutions," which kinda sounds like the opposite of letting go.
Just six weeks after ex-FTX CEO Sam Bankman-Fried was found guilty of his own bevy of financial crimes, this latest play in the battle between crypto vs. government regulators has very much come out on the side of the feds — though CZ, unlike SBF, seems to be handling it much more savvily.
More on crypto: A Former FTX Exec is Launching a New Crypto Exchange
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