Binance submitted its plea before a federal court in Seattle, Washington on Nov. 21. As part of its guilty plea, the cryptocurrency company has agreed to pay a $50 million fine to the federal government – a fine that, interestingly enough, is separate from the $4.3 billion investigation resolution Binance has with the Department of Justice. (Related: 47 Nations combine forces to require automated tax authority monitoring of crypto trading data.)
As part of the guilty plea, Binance CEO Changpeng Zhao, a Chinese-Canadian, has also agreed to step down.
"Today, I stepped down as CEO of Binance. Admittedly, it was not easy to let go emotionally," he said in a statement. "But I know it is the right thing to do. I made mistakes, and I must take responsibility. This is best for our community, for Binance and for myself."
As part of the ongoing investigation against Binance and Zhao by the Justice Department, federal prosecutors are reportedly seeking an 18-month prison sentence for the CEO, in line with maximum federal guidelines. Other media outlets claim that Zhao could even face up to 10 years in prison.
Once Zhao and his former company's legal troubles conclude, he plans to become a private, passive investor in the cryptocurrency industry, including on blockchain initiatives. He has also suggested that he wants to remain involved with Binance as a consultant and a shareholder.
Zhao previously pleaded with the Seattle court to consider allowing him to return to his home in the United Arab Emirates, where he is also a citizen, while he awaits his sentencing hearing in February 2024. This appeal was initially approved by a different court, provided that Zhao pay a $175 million bond as part of a bail agreement.
The government, however, did not want Zhao to leave, and so it appealed the decision to District Judge Richard Jones, who ordered Zhao to remain in the United States while he conducts a more thorough review of his appeal.
The government has warned that it may be unable to secure Zhao's return given that Washington does not have an extradition treaty with Abu Dhabi. Zhao's lawyers have contested the accusation that he is a potential flight risk, noting that he has already paid a substantial bail package and even voluntarily came to the U.S. to stand trial.
Regardless of the outcome of Zhao's sentencing, U.S. authorities have described the ordeals it has placed upon Zhao and Binance as a watershed moment in the government's ongoing battle to make the cryptocurrency industry comply with federal law.
"Crypto's creators aspired to create a decentralized money system, with no entry points for state oversight and surveillance," wrote Henry Farrell and Abraham Newman for the Wall Street Journal. "But the crypto economy has become increasingly centralized around exchanges like Binance and Coinbase."
"While these exchanges allow customers to store and convert money from one cryptocurrency into another, they also give the government a massive opening," they continued. "Crypto is being tamed, as its central actors agree to implement U.S. rules, extending the government's reach into the heart of the crypto economy."
Learn more about cryptocurrencies at CryptoCult.news.
Watch this clip from GNews discussing how Binance readily cooperates with the Chinese Communist Party.