Binance founder Changpeng Zhao (CZ) will step down from his CEO duties and plead guilty to criminal charges, paying a $50 million fine, according to court documents made public Tuesday. The Department of Justice is expected to announce a $4 billion settlement with Binance this afternoon, putting an end to a fierce legal battle between the U.S. and the world’s largest crypto exchange.
Binance U.S. may live to trade another day, but not with CZ at the helm. New details emerged Tuesday around a $4 billion settlement to resolve a Commodity Future Trading Commission lawsuit from March, and the Department of Justice’s investigation into Binance. CZ will no longer run Binance, but he still maintains a majority ownership in the company.
Binance was charged with three counts, including money laundering violations, and US sanction violations. The filings allege that Binance knowingly and willfully took part in transactions between the U.S. and Iran worth $848 million. The crypto exchange will also be required to follow new compliance regulations as a result.
The Department of Justice did not immediately respond to Gizmodo’s request for comment.
In March, the CFTC alleged that Binance disregarded US laws while cultivating a US customer base because it was profitable for them to do so. The CFTC alleged, “Binance has never been registered with the CFTC in any capacity and has disregarded federal laws essential to the integrity and vitality of the U.S. financial markets.” Binance danced around U.S. controls to prevent money laundering and terrorism financing, according to the CFTC. Part of Tuesday’s settlement is expected to pay penalties related to the CFTC’s suit.
One lawsuit against Binance is still on the table, however, from the SEC. In June, the SEC alleged Binance ran an illegal cryptocurrency exchange citing the “Defendants’ blatant disregard of the federal securities laws.” The SEC said Binance took billions of US dollars “while placing investors’ assets at significant risk.” The charges included operating unregistered exchanges, offering unregistered securities, and misrepresenting trading controls on the Binance US platform. This lawsuit is still ongoing according to the Wall Street Journal.
Zhao appeared in a Seattle federal court Tuesday to enter his plea.
According to Bloomberg reporting from the courtroom:
Zhao faces a maximum sentence of 10 years and fines up to $500,000, plus any profits he made from the alleged scheme. His lawyers said in court on Tuesday that his sentencing will be delayed by 6 months. Zhao’s agreement includes a waiver of his right to appeal, provided that his sentence doesn’t exceed 18 months, according to Judge Brian Tsuchida said during the plea hearing.
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