Changpeng Zhao, the founder of the world’s largest cryptocurrency exchange, Binance, has resigned and pleaded guilty to violating anti-money laundering laws.
Changpeng Zhao, widely known as “CZ,” has stepped down as part of a $4 billion (£3.2 billion) settlement with US regulators, concluding a lengthy investigation into the platform.
His departure mirrors the recent downfall of FTX, the second-largest exchange, where Sam Bankman-Fried faced fraud charges and was convicted of misusing customer funds.
During a court appearance in Seattle, Zhao acknowledged his failure to implement measures to prevent money laundering at Binance.
Despite residing in the United Arab Emirates, a jurisdiction without an extradition treaty with the US, Zhao voluntarily appeared in court.
His lawyer stated, “He decided to come here and face the consequences. He’s sitting here. He pled guilty.”
Zhao, also known as “CZ,” is expected to be sentenced next year. Despite residing in a jurisdiction without an extradition agreement with the US, he expressed his commitment to returning for sentencing, stating,
“I want to take responsibility and close this chapter in my life. I want to come back. Otherwise, I wouldn’t be here today.”
Changpeng Zhao
In a parallel development, the US Securities and Exchange Commission filed a lawsuit against Binance and Zhao in June.
The allegations include artificially inflating trading volumes, diverting customer funds, and misleading investors.
This adds to the challenges facing the cryptocurrency sector, already grappling with controversies and security breaches.
As news of Zhao’s resignation and guilty plea circulated, major cryptocurrencies, including Bitcoin and Ether, experienced a decline in market value.
Additionally, reports indicate a significant withdrawal of funds by Binance customers from the platform, underscoring the broader impact of the developments on market participants.
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