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Binance FTX Déjà Vu as CEO Pleads Guilty and Company Charged with $4.3 Billion in Fines

Binance FTX Déjà Vu as CEO Pleads Guilty and Company Charged with $4.3 Billion in Fines
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Binance CEO Changpeng Zhao pleaded guilty to money laundering in Seattle a few hours back. The exchange is now slapped with a $4.3 billion fine (AUD 6.6 billion), the largest in corporate history.

Figure 1 – Binance CEO

Binance allegedly allowed transactions for terrorist groups and other entities sanctioned by the US authorities. Binance FTX and who next – a key question only time will answer on the backdrop of the ongoing Israel-Hamas crisis.

Attorney General Merrick Garland remarked – “Binance has committed crimes to become the world’s largest cryptocurrency exchange, which is why they’re paying one of the biggest corporate penalties in history.”

What is Binance and the Binance CEO Charged With?

As the largest cryptocurrency exchange in the world, Binance has hosted transactions across US-sanctioned zones, including- but not limited to Iran, Syria, and Cuba.

A joint probe was conducted by US federal agencies, including the Justice Department, the Financial Crimes Enforcement Network (FinCEN), the Office of Foreign Assets Control (OFAC), and others.

According to the official statements filed against Binance and CEO Changpeng, Binance overlooked ‘legal obligations in pursuit of profit’ by extending financial assistance and services via its platform to ‘terrorists and cyber criminals.’

Binance will now commit $1.81 billion within the next 15 months and $2.51 billion as forfeiture against ‘ill-gotten gains from transactions’ to sanctioned entities.

This news coincides with the fact that FTX founder Sam Bankman-Fried was convicted of fraud, leading to the complete meltdown of the FTX crypto exchange.

Will we see an FTX-like meltdown for Binance?

Binance CEO Changpeng Zhao is facing a maximum of 18 months behind bars. An immediate repercussion saw Changpeng release a statement citing his immediate resignation as CEO of Binance. In an emotional statement on X, he mentions that ‘it is the right thing to do’ and that he ‘made mistakes’ and ‘must take responsibility.’ Changpeng will continue to maintain his share in Binance.

This starkly contrasts with FTX founder Sam, who has been around the world and more during the international backlash.

Binance stated that it has ‘resolved with several US agencies’ regarding the investigation. As such, to date, Binance will continue to function, albeit under a new CEO.

Further, Binance has withdrawn from its planned FTX purchase after completing due diligence. This means the Binance FTX deal is officially off the radar, and FTX is considering complete liquidation.

The heavy involvement of multiple US financial institutions in cryptocurrencies, including JP Morgan, Blackrock Investments, and others, will help maintain investor optimism about crypto. Despite the ongoing Israel-Hamas conflict, Binance might suspend functions in sanctioned entities while continuing operations in key geographical locales, including the US, Australia, EU, and Asia.


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