The DOJ has charges with a huge money-laundering scheme
The indictment of the Binance money laundering trader and dark-web trader in the US, and its investigation by the Garland court system
The indictment alleges, for instance, that Binance allowed more than 1.1 million transactions between US persons and Iranians—each one an alleged sanctions violation—totaling to a value of nearly $900 million. It also alleges $106 million in direct flows of money from the Russian dark web market Hydra, which offered narcotics, stolen data, and money laundering services, to Binance accounts.
The company faces two civil lawsuits in the US, one of which is an allegation of commingling of customer assets, anti-money-laundering violations and artificially inflating trading volumes.
In the last year, Zhao had taken to responding to negative headlines on X, formerly Twitter, by posting “4”—a symbol he adopted to dismiss allegations made against the company as baseless FUD (shorthand for fear, uncertainty and doubt). But the DOJ investigation into Binance was an open secret in crypto circles, and Binance insiders say that staff have been anxiously waiting for charges to drop, amid a “general sense of doom.”
The newchief executive is a very different person. Replacing Zhao is Richard Teng, a former regulator who has little public profile. In June, when he was elevated to head of regional markets at Binance, there were whispers that he could be the successor to Zhao. However, Teng wouldn’t be drawn on the matter in an interview with coinDesk. He previously held the role of head of Asia, Europe, and MENA at the exchange.
Garland announced Tuesday that Zhao had pleaded guilty to a felony money laundering violations charge and that the company had agreed to pay a $4.3 billion fine as part of a settlement with the DOJ. Zhao has also stepped down from his role running the company.
The documents describe a company that allegedly turned a blind eye, sometimes willfully and consciously, to trading funds from areas like Iran, Cuba, Syria, and the Russian-occupied areas of Ukraine.
There is an extent to which Zhao was the last of his breed. In the wake of the collapse of the market in May 2022, many of the industry’s figureheads have either been convicted or charged with felonies. In February, the US government brought charges against Do Kwon, creator of the Terra-Luna stablecoin whose collapse in spring 2022 tipped the first fateful domino in the industry. In July, the DOJ charged Alex Mashinsky, founder of bankrupt crypto lender Celsius, with “orchestrating a scheme to defraud customers.” FTX’s leader, Sam Bankman-Fried, was found guilty of overseeing a multi-million dollar fraud.
