Binance founder pleads guilty to anti-money laundering violations, steps down

Binance, the largest global cryptocurrency exchange, will pay $4.3 billion in fines after its chief executive pleaded guilty to violating anti-money laundering rules in the US.

Changpeng Zhao appeared in Seattle federal court on Tuesday and entered a guilty plea for failing to report over 100,000 suspicious transactions with terrorist groups.

US Attorney General Merrick Garlan said on Tuesday that Binance “made it easy for criminals to move stolen funds and illicit proceeds on its exchanges”.  

Zhao will personally pay $50 million, and will step down as chief of the cryptocurrency exchange. The agreement would also halt most investigations into Binance.

Binance is the world leading cryptocurrency exchange, but a collapse in the crypto markets and increased regulatory attention on the sector has dealt a blow to the company.

It was once the poster-boy for Malta’s blockchain and cryptocurrency strategy. When Binance announced it would be heading to Malta in March 2018, former prime minister Joseph Muscat was quick to welcome the exchange. He posted on Twitter that Malta wants to be “the global trailblazers in the regulation of blockchain-based businesses and the jurisdiction of quality and choice for world-class fintech companies”.

Binance was somewhat operational in Malta, but never actually received a license to operate in Malta when regulations were introduced.

Indeed, the Malta Financial Services Authority has warned several times that Binance is not authorised to carry out Virtual Financial Assets related activities in or from Malta.

It currently has two active companies on the Malta Business Registry. These are Binance Marketing Services Limited and Binance Europe Services Limited. Both were registered in April 2018.