- Binance CEO Changpeng Zhao is preparing to step down from the company he founded 2017.
- He is set to plead guilty to federal money laundering charges.
- The crypto exchange’s global head of regional markets, Richard Teng, will take over as CEO.
Binance is in the news again for all the wrong reasons as its CEO, Changpeng Zhao, has announced that he has stepped down from his position. The shake up in leadership at the crypto exchange platform is as the result of Zhao preparing to plead guilty to federal money laundering charges in the United States.
As CNBC reports, Zhao appeared before Judge Brian Tsuchida in Seattle, Washington this week to enter in his guilty plea.
The guilty plea is part of a deal, following Zhao’s admitting to violating and causing a financial institution to violate the Bank Secrecy Act. Along with his stepping down, he will not be able to be involved in any Binance-related business or operations for the next three years.
The US Justice Department noted that Zhao and others failed to implement an anti-money laundering program and knowingly violated the company’s economic sanctions as part of a “deliberate and calculated effort to profit from the U.S. market without implementing controls required by U.S. law.”
Binance is reportedly responsible for handling more than $900 million in financial transactions linked to US sanctions with Iran between 2018 and 2022. As such, it is not a good look for a crypto exchange that has actively tried to rehabilitate its image in countries where regulators have intensified scrutiny of its operations.
As for Zhao’s replacement, the outgoing CEO confirmed that global head of regional markets, Richard Teng, will take over as the exchange’s head.
Zhao also detailed the past six or so years at the company in a post shared on X (formerly Twitter), where he explained that he will take a break and look into “passive investing” or acquiring minority stakes in burgeoning startups. Whether he will actually be able to do so as part of his plea deal, remains to be seen, but his role in the cryptocurrency industry is certainly set to be far less high profile.
“I can’t see myself being a CEO driving a startup again. I am content being an one-shot (lucky) entrepreneur. Should there be listeners, I may be open to being a coach/mentor to a small number of upcoming entrepreneurs, privately. If for nothing else, I can at least tell them what not to do,” he pointed out on the social media platform.
As for Binance, as Engadget points out, the exchange will still be operating, although it will now have to do so under far stricter regulation, including having a well-established anti-money laundering program in place.
Other steps that will need to be taken include appointing an independent compliance monitor.
Zhao’s new fate is now a reminder for all crypto exchanges operating in the US to implement above board practices, as failure to do so could have significant consequences.
“Today’s historic penalties and monitorship to ensure compliance with US law and regulations mark a milestone for the virtual currency industry,” highlighted US Treasury Secretary Janet Yellen.
“Any institution, wherever located, that wants to reap the benefits of the US financial system must also play by the rules that keep us all safe from terrorists, foreign adversaries, and crime, or face the consequences,” she added in a statement.