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Report: Binance to Pay $4.3b in Massive Settlement with DOJ

Numerous outlets are reporting that crypto exchange Binance has reached a monumental $4.3 billion settlement with the US Department of Justice.

The Wall Street Journal is also reporting that Binance CEO and founder Changpeng “CZ” Zhao has agreed to step down as part of the deal. According to the report Zhao will plead guilty to violating US anti-money laundering requirements but, thanks to the deal, Binance will be able to continue operating.

Binance, which is the world’s largest crypto exchange, has been the target of the DOJ, CFTC and the SEC over the years. This particular deal only involves the CFTC and DOJ. There’s no doubt that Binance’s settlement with the DOJ will have reverberations for the crypto industry for years to come but it does appear that some sort of regulatory clarity is coming into focus.


Zhao to Appear in Federal Court Today

According to reports Changpeng Zhao, who was born in China but immigrated to Canada when he was 12, will enter his plea in federal court in Seattle later today.

It’s also been reported that while Zhao will step down from his position of CEO at Binance, he will retain his majority stake in the company.

Earlier this year the CFTC alleged that Binance offered crypto derivatives such as options or futures contracts without being registered as a futures commodities merchant.

The SEC would later follow those charges up with 13 more charges in the summer all related to running an unregulated international exchange, commingling investor funds with their own and violating securities laws.

Binance is hardly the only exchange to raise the ire of the SEC. The SEC a similar complaint against Coinbase this summer (although it did include any charges of commingling customer funds). The SEC also sued Kraken exchange earlier this week, alleging the organization failed to register as a securities exchange.

Both Coinbase and Kraken, which are headquartered in the USA, have vehemently opposed the charges laid against them by the SEC.

Binance Will Continue Operation

A little over a year ago Binance and FTX exchange were two of the biggest crypto exchanges in the world with significant pull in the industry.

In roughly 12 months FTX has been essentially vaporized with founder Sam Bankman-Fried facing decades in prison and Binance losing $4.3 billion one of the biggest settlements in this history of cryptocurrency.

The big difference between the two is that Binance was solvent and will continue to operate. It remains to be seen how the massive settlement will impact Binance’s business and whether its status as the largest crypto exchange in the world is in danger. It seems likely it won’t be operating in the USA any time soon.

“Binance became the world’s largest cryptocurrency exchange in part because of the crimes it committed – now it is paying one of the largest corporate penalties in U.S. history,” said Attorney General Merrick Garland in a press release.

Meanwhile in a blog post Binance admitted the company did not have adequate compliance controls in the beginning. The statement added, however, that the company has never faltered in its measures to protect customer’s assets with 1:1 backing for every asset and never misappropriated customer funds (unlike FTX).

Finally CZ offered a lengthy goodbye post on Twitter:

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Arthur Crowson

About the Author

Arthur Crowson

Arthur Crowson is an award-winning writer and editor who hails from the Pacific Northwest. His career began in traditional news media but he transitioned to online media in the mid-2000s and has written extensively about the online poker boom and the rise of cryptocurrency.

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