Zhao Steps Down as Binance US Chair in Fallout From DOJ Settlement - BLOOMBERG
BY Bloomberg News,
Changpeng Zhao, chief executive officer of Binance Holdings Ltd., center, exits federal court in Seattle, Washington, US, on Tuesday, Nov. 21, 2023. Zhao pleaded guilty to anti-money laundering violations and agreed to pay a $50 million fine Tuesday under a sweeping deal worked out with the Justice Department designed to keep the company operating. Photographer: Chloe Collyer/Bloomberg , Bloomberg
(Bloomberg) -- Billionaire Changpeng Zhao stepped down as chairman of crypto exchange Binance.US a week after pleading guilty to Department of Justice charges and relinquishing his chief executive officer role at Binance’s global business.
Zhao retains an economic interest in Binance.US but has transferred his voting rights via a proxy arrangement and will no longer be involved in governance, the platform said Tuesday in a post on social media service X.
Binance Holdings Ltd. and Zhao last week pleaded guilty to US anti-money laundering and sanctions violations and will pay fines of $4.3 billion and $50 million respectively. Zhao faces up to 10 years in prison but may get no more than 18 months under a plea deal that allows the exchange to continue operating.
Zhao quit as CEO of Binance Holdings under the deal, which resolved a criminal probe into the world’s largest crypto exchange. Binance.US is a separate corporate entity intended to serve American clients. Both companies, together with Zhao, face an ongoing US Securities and Exchange Commission lawsuit.
Read more: Binance Pleads Guilty, Loses CZ, Pays Fines to End Legal Woes
The agency in June accused Binance and Zhao of mishandling customer funds, misleading investors and regulators, and breaking securities rules. The SEC alleged Zhao and Binance secretly controlled the Binance.US platform’s operations. Binance has rejected the claims and vowed to defend itself.
Zhao is the founder of the Binance platform, which burst onto the crypto scene in 2017 but has seen its dominance of digital-asset spot and derivatives trading wane this year under the weight of a web of regulatory investigations.
Since the SEC lawsuit, Binance.US lost banking support, suspended dollar deposits and cut its workforce. The exchange’s market share collapsed.
While the plea deal reduces the tail risk of major turbulence at Binance Holdings, the digital-asset industry’s linchpin global trading venue, Zhao’s successor as CEO Richard Teng faces the tough task of reshaping the company to avoid regulatory landmines.
Read more: New Binance CEO Teng’s First Job Is to Avert Customer Exodus
In his first blog as CEO, Teng said on Monday that Binance has “turned the page” on historical challenges and over the past two years “systematically worked to address its past compliance issues.”
Teng told Fortune in an interview that Binance will adopt a conventional corporate structure, including a headquarters and a board of directors. The company will boost transparency about its finances, according to the report.