Six years after founding Binance, Changpeng Zhao finally had to leave the company. But it was the best he could achieve in his years-long battle with U.S. regulators. On Tuesday (November 21) local time, Binance pleaded guilty and reached a settlement with the U.S. Department of Justice, Treasury and the Commodity Futures Trading Commission (CFTC), agreeing to pay a total of $4.3 billion in fines and compensation to the U.S. federal government. Changpeng Zhao admitted to money laundering and will resign as CEO of the company and pay a fine of US$50 million. The new CEO is Richard Teng, Binance’s former global regional market director.


A fine of US$4.3 billion (approximately 30.7 billion yuan) is the largest fine in the history of Chinese entrepreneurship. This amount is equivalent to 1.7 times Alibaba’s record fine of 18 billion yuan, and is the total net profit of CATL in the first three quarters of this year.

The fine marks the end of a years-long investigation into Binance by U.S. regulators. It is generally believed that the conclusion of the settlement agreement will help Binance exhaust its shortcomings.

Compared with what happened to Sam Bankman-Fried, co-founder and CEO of FTX, another cryptocurrency trading platform, the maximum 18 months in prison that Changpeng Zhao may face is even more insignificant. Sam Bankman was found guilty of seven counts related to fraud and money laundering, and will be sentenced to up to 115 years in prison. Prosecutors called it "one of the largest financial frauds in U.S. history."

The settlement agreement indicates that Binance has been temporarily declared safe. The company emphasized in its statement that in the settlement agreement, U.S. regulators did not accuse Binance of misappropriating any user funds, nor did they accuse Binance of any market manipulation.

Changpeng Zhao was allowed to return to the United Arab Emirates after paying a bail of US$175 million - after he moved his family to Dubai to seek support from the local government. Zhao Changpeng’s sentencing hearing will be held on February 23, 2024, local time in the United States.

"I made a mistake and must take responsibility." Changpeng Zhao posted on social platform

However, Changpeng Zhao still owns a majority stake in Binance.

01.What happened?

As early as 2018, the U.S. Department of Justice focused on Binance due to an investigation into a case in which criminals transferred illegal funds through Binance. The U.S. Department of Justice is more concerned about whether there is money laundering on the Binance platform and whether Binance violates U.S. sanctions. This investigation lasted several years.

In 2019, Binance opened Binance.US in the United States in response to U.S. regulations, calling it a compliant platform. In 2021, Binance was investigated by the U.S. Department of Justice and the Internal Revenue Service for suspected money laundering and tax evasion.

Reuters reported late last year that some federal prosecutors believed they had gathered enough evidence to take action against Binance, including filing criminal charges against Changpeng Zhao.In addition, sources said that U.S. Department of Justice officials discussed a possible plea agreement with Binance’s lawyers.

At that time, Binance responded that the Reuters report was incorrect.

But in February this year, Binance Chief Strategy Officer Patrick Hillman stated that he was willing to pay a fine to reach a settlement with the regulator.

The U.S. Department of Justice filed multiple charges against Binance, including money laundering, conspiracy to conduct unlicensed money transfers, and sanctions violations. Binance admitted to all of the above charges. Binance said in a statement that the settlement agreement recognized our company’s past criminal liability for compliance violations. It also opened a new chapter for our company that is full of challenges, but also learning and growth.

The settlement agreement reached by Binance on November 21 involves multiple U.S. regulatory authorities, including the Department of Justice, the Treasury Department, and the Commodity Futures Trading Commission (CFTC).However, it must be emphasized that the settlement reached by Binance with US regulatory authorities does not include the US Securities and Exchange Commission (SEC).

The SEC filed a civil lawsuit against Changpeng Zhao and Binance affiliates in June this year, accusing them of violating a series of securities regulations, including 13 charges including illegal transfer of customer funds, violation of U.S. securities trading rules, operating an illegal trading platform, and fraudulent transactions. The lawsuit is 136 pages long.

Litigation with the SEC may take several years, which will be another major challenge facing Binance. The Wall Street Journal stated that this may be the most significant action of the SEC to date. Forcing cryptocurrency developers and exchanges to register with the SEC will mean that the cryptocurrency industry will adopt a series of costly regulatory rules that Wall Street must comply with, including information disclosure for investors and the prohibition of certain conflicts of interest.

02. Binance without a fixed abode

Zhao Changpeng's resignation as CEO has been followed by signs before.

Under the pressure of years of investigations into Binance by U.S. regulators, Changpeng Zhao disclosed his intention to resign as CEO as early as 2021. He said that he is looking for someone “with a strong regulatory background” as Binance’s new CEO. According to "Latepost", the main factor why Changpeng Zhao is considering abdicating is the continued tightening of regulations on Binance by governments around the world.

In the past few years, although Changpeng Zhao has claimed to embrace regulation, Binance has never truly reached substantial cooperation with any government agency around the world. Since its establishment, the company has been traveling to different countries and regions to seek the most friendly policy support for the cryptocurrency field.

Changpeng Zhao founded Binance in Shanghai in 2017. At that time, it was on the eve of the outbreak of blockchain in China, and investors were flocking to it. In just half a year, Binance became the world’s largest cryptocurrency platform by trading volume, which it continues to do today.

However, as China completely banned token issuance financing activities and suspended cryptocurrency trading business, Zhao Changpeng urgently led his team to Japan. One report stated that Zhao Changpeng secretly and nervously migrated data hosted on more than 200 Alibaba servers to Amazon and other overseas servers within a few weeks.

In January 2018, due to the theft of Japan's Coincheck exchange, resulting in losses of more than 3.4 billion yuan, the Japanese Financial Services Agency urgently issued strict regulatory measures on cryptocurrency trading platforms. In March, Japan’s Financial Services Agency said Binance was conducting cryptocurrency trading business without being registered in Japan and issued a warning. Binance withdrew from Japan four days later.

In the following months, Zhao Changpeng visited countries including Malta, Uganda, and Bermuda intensively in an effort to obtain legal operations there. But these collaborations were short-lived.

After successive setbacks in many countries and regions with relatively loose cryptocurrency policies, Changpeng Zhao gave up the idea of ​​setting up a physical headquarters of Binance. Changpeng Zhao stated that Binance is a decentralized organization and does not have a global headquarters. Wherever he works is Binance’s headquarters.

He has traveled around Southeast Asia, Europe and many other places, with no fixed residence and whereabouts. During the epidemic, he stayed in Singapore for a time, commanding his cryptocurrency empire remotely from a small room of less than 10 square meters.

Changpeng Zhao’s secretive whereabouts are even considered to be the result of Binance’s deliberate creation. "Fortune" magazine stated in an exclusive interview in April this year that in 2021, a competitor of Binance hired a private detective to search for Changpeng Zhao's traces, but in the end nothing was found. The private investigator suspected that Binance hired people to cover up Changpeng Zhao’s whereabouts.

Even after the SEC sued Changpeng Zhao and Binance affiliates in June this year, it failed to deliver court documents to Changpeng Zhao and could only request the court's approval to send copies of documents to Changpeng Zhao's lawyers in an "alternative manner."

To some extent, Binance’s decentralized organizational structure also helps the trading platform evade government supervision. Some media reported that Binance was operating in a gray area, operating outside of regulation, and profiting from illegal transactions.

03.Spiritual idol CZ

Changpeng Zhao, better known as "CZ" in the circle, is keen to communicate with his supporters through X. His account "cz_binance" has more than 8.74 million fans. Under the post announcing his resignation as Binance CEO, the messages on the screen were all "Thank you for everything".

After the news of CZ pleading guilty and resigning as CEO was exposed, some people in the currency circle said that Binance’s representative figures responded quickly in various social groups and responded to users’ questions in a stable manner. They believe that CZ has made huge sacrifices for the development of Binance. He has completed his historical mission, but the history of Binance continues.

Some currency circle media even published an article saying that CZ has always been one of the most loyal believers in cryptocurrency and a great Chinese entrepreneur.

The reason why Changpeng Zhao is admired by people in the industry is related to his growth experience and modest image. He did not finish college and started from scratch with his superior technology. The 6 years he created the CZ era were also the 6 years that cryptocurrency flourished. Insiders believe that Binance played an important role in establishing confidence in the industry during the bear market.

However, the controversy surrounding the former richest man in China is not small, including a series of Binance incidents known as "cutting leek", such as the liquidation incident where the victim owed money on Binance, the misappropriation of 107 Bitcoins from foreign users, the "runaway" of multiple Binance Smart Chain projects, the liquidation incident caused by malicious network disconnection in the contract market, and even vulgar sideline marketing in recruitment announcements.

But no matter which image he takes, he always lives in the online world. On November 21, Zhao Changpeng made a rare appearance at the federal court hearing in Seattle, which exceeded most people's expectations.

According to foreign media, as one of the few well-known exchanges to survive the turmoil in the currency circle last year, Binance must resolve various legal proceedings if it wants to continue to survive. After reaching a settlement, it is still possible to face criminal charges from the U.S. Department of Justice. If Binance can meet the preset conditions, this charge will not proceed. The conditions involve paying substantial fines, issuing a declaration of wrongdoing, and establishing procedures to monitor compliance.

At present, Zhao Changpeng has paid a bail of US$175 million and been released, awaiting "further proceedings" in his suspected money laundering case. As part of his bail conditions, he must return to the United States 14 days before his scheduled sentencing date.