Binance CEO Changpeng Zhao ousted for U.S. crimes; Richard Teng to replace

In a major development in the crypto market, Binance Holdings Ltd, the world’s largest crypto exchange, and its former head Changpang Zhao pleaded guilty in a money laundering case following the U.S. government's investigation. Binance has been fined a whopping $4.2 billion in order to continue operations in the U.S. Meanwhile, Zhao, who has stepped down as the company's CEO, has been sentenced to 10 years in prison and has been fined $50 million.

Charges against Binance

Zhao and Binance have pleaded guilty to money laundering and violating U.S. sanctions by the Federal Justice Department, Treasury Department and Commodity Futures Trading Commission. The case stems from a year-long investigation by the U.S. government against Binance in relation to violation of the Bank Bank Secrecy Act (BSA), failure to register as a money-transmitting business, and the International Emergency Economic Powers Act (IEEPA).

Meanwhile, Zhao has also pleaded guilty to failure to maintain an effective anti-money laundering programme. As part of the settlement, the crypto firm is paying a fine of $1.8 billion and forfeiting $2.5 billion.

"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," says Attorney General Merrick B. Garland.

According to Secretary of the Treasury Janet L Yellen, the crypto firm profited from money transactions to terrorists, cybercriminals and child abusers through its platform across Iran, Cuba, Syria, and Russian-occupied regions of Ukraine. The company violated anti-money laundering regulations, says the government agency.

"Binance’s crimes gave sanctioned customers unfettered access to American capital and financial services. This prosecution is a warning that companies that do not build sanctions compliance into their services face serious criminal penalties, as do the executives who lead them," says Assistant Attorney General Matthew G. Olsen of the Justice Department's National Security Division (NSD).

According to the US government agency, the crypto firm did not implement comprehensive know-your-customer (KYC) protocols or systematically monitor transactions, and Binance never filed a suspicious activity report (SAR) with FinCEN. 

Following this, Binance, which has admitted to prioritising growth and profits over compliance with the US law, says it is working towards "restructuring the organization and personnel, upgrading our systems, and establishing a new industry standard in compliance."

Richard Teng as new CEO

The world's largest crypto exchange has appointed Richard Teng as the new CEO of the company after Zhao stepped down as the CEO. Prior to joining Binance, Teng worked as the CEO of financial Services Regulatory Authority at Abu Dhabi Global Market; the Chief Regulatory Officer of the Singapore Exchange (SGX), and the Director of Corporate Finance in the Monetary Authority of Singapore.

"It is an honour and with the deepest humility that I step into the role of Binance’s new CEO. We operate the world's largest cryptocurrency exchange by volume. The trust placed on us by our 150m users and thousands of employees is a responsibility that I take seriously and hold dear. With CZ and our leadership team’s support, I have accepted this role so that we can continue to meet and exceed the expectations of stakeholders while achieving our core mission, the freedom of money," Teng writes in a post on the social media platform X.

"The foundation on which Binance stands today is stronger than ever. To ensure a bright future, I intend to use everything I’ve learned over the past three decades of financial services and regulatory experience to guide our remarkable, innovative, and committed team," he adds.

According to Teng, Binance’s focus will be on collaborating with regulators to uphold high standards globally that foster innovation while providing important consumer protections and working with partners to drive growth and adoption.

Notably, this is not the first time that Binance has been involved into controversy. In August last year, the crypto firm was embroiled in a controversy entailing the ownership of domestic crypto firm WazirX. Wazir Xco-founders Nischal Shetty and Hanuman Mhatre have accused Binance of disowning the crypto firm after the latter was being investigated by the enforcement directorate in alleged money laundering. The duo claims that Binance acquired WazirX in 2021, however, Zhao has maintained that Binance only provides wallet services to WazirX as a tech solution and does not own WazirX.