Binance Fined Over $4B For Not Guarding Against Money Laundering, Hamas Transactions: Garland

Binance, the world’s largest cryptocurrency exchange, was fined Tuesday $4.3 billion after CEO Changpeng Zhao pleaded guilty to failing to comply with US anti-money laundering and funding of terrorism laws.

At a press conference announcing the record fine, Attorney General Merrick B. Garland said: “As CEO of Binance, Zhao willfully violated federal law that requires financial institutions to guard against money laundering and terrorist financing.”

The exchange was also found to have failed to report transactions with websites that sell child sexual abuse material. It also received proceeds from cybercrime in the form of ransomware payments.

Treasury Secretary Janet Yellen added: “Binance turned a blind eye to its legal obligations in the pursuit of profit. Its willful failures allowed money to flow to terrorists, cybercriminals, and child abusers through its platform.”

Binance will pay the majority of the fine, while China-born Canadian national Zhao will pay $50 million.

Also Read: Binance Faces Leadership Exodus: UK CEO Exits Amid Regulatory Challenges

Zhao Stands Down As Binance CEO

The guilty plea was entered in person by Zhao in the US District Court for the Western Division of Washington, following a four-year investigation by the Commodity Futures Trading Commission (CFTC) and other law agencies.

Binance, whose native token is BUSD ($BUSD), was found to have failed to report more than 100,000 suspicious transactions from groups and organizations including Hamas, which is currently embroiled in a conflict in Israel. Other groups included Al Qaeda and the Islamic State of Iraq and Syria, the investigation found.

Zhao posted on social media: “Today, I stepped down as CEO of Binance. Admittedly, it was not easy to let go emotionally. 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.”

Today, I stepped down as CEO of Binance. Admittedly, it was not easy to let go emotionally. 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.

Binance is no longer a baby. It is…

— CZ 🔶 Binance (@cz_binance) November 21, 2023

While already under scrutiny, the CFTC found Binance employees were taking a lax approach to AML laws. Chief compliance officer Samuel Lim in 2019 “explained to a colleague that terrorists usually send ‘small sums’, as ‘large sums’ constitute money laundering,” said the CFTC when it filed its lawsuit in March.

Although the largest fine to be slapped on a cryptocurrency exchange for AML violations, it was not the first. Last year the co-founders of BitMex settled for $100 million for “failing to establish, implement and maintain an anti-money laundering program.”

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