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Changpeng Zhao, the crypto king and Binance chief, ousted for US crimes

Published 11/21/2023, 06:30 PM
Updated 11/22/2023, 06:16 AM
© Reuters. Zhao Changpeng, founder and chief executive officer of Binance greets the audience during an event in Athens, Greece, November 25, 2022. REUTERS/Costas Baltas/File Photo

By Tom Wilson

LONDON (Reuters) -The most powerful man in crypto has lost his crown - and could see his freedom curtailed as well.

Binance chief Changpeng Zhao on Tuesday stepped down and pleaded guilty to breaking U.S. anti-money laundering laws as part of a $4.3 billion settlement resolving a years-long probe into the world's largest crypto exchange, prosecutors said.

The deal with the Justice Department, part of a large settlement between Binance and other U.S. agencies, resolves criminal charges for conducting an unlicensed money transmitter business, conspiracy and breaching sanctions regulations.

It also leaves Zhao's future uncertain.

"Today, I stepped down as CEO of Binance," Zhao tweeted. "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."

Zhao, known as CZ, will personally pay $50 million and is barred from all involvement with Binance.

U.S. sentencing guidelines call for prison time of 10 to 18 months for the charges he faces. Prosecutors are seeking an 18-month prison sentence, the New York Times reported.

Zhao and his lawyers did not return calls seeking comment.


After launching Binance in Shanghai in 2017, Zhao dreamed big. "We want to take over the entire market!" he told staff in a company chat group that year.

The 46-year-old CEO did not waver in his belief as he built up his crypto exchange. Even this year, Zhao felt a major goal was within reach.

"The idea that a five-year-old start-up could mature and operate at the same level as a financial institution that has been around for 200 years was once impossible to fathom," Zhao wrote in January in a review of the previous year. "But we are nearly there today."

In that review, Binance hailed its progress in complying with regulations across the world. The exchange had strived through the year to strengthen client checks, it said, developing crypto's "best security and compliance team."

Zhao's public aim to be a part of all that has been dashed by Tuesday's guilty plea and settlement.

"By failing to comply with U.S. law, Binance made it easy for criminals to move their stolen funds and illicit proceeds on its exchanges," U.S. Attorney General Merrick Garland said on Tuesday. "Binance also did more than just fail to comply with federal law. It pretended to comply."


Zhao was born in China before moving to Canada in 1989 at age 12, two months after China's Tiananmen Square crackdown  on pro-democracy protesters, he wrote in a blog last year.

The tycoon crisscrossed the globe in his quest for  success, working in Tokyo and New York before moving to  Shanghai, where he embraced crypto and founded Binance.

Its expansion was dramatic. Binance became the world's biggest crypto exchange within six months.

While its market share has slipped this year, it still accounts for about half of global crypto  trading volumes, according to research firm CCData.

From the company's earliest days, Zhao kept a tight grip on Binance, as a powerful leader committed to secrecy and focused on market domination, a Reuters report last year found. As CEO, he remained in control of minute operational detail, at the same time posting social media selfies with world leaders and city mayors.

Zhao installed a tight circle of associates, many of  whom had worked or studied in China, into top jobs. Co-founder Yi He now runs Binance's venture capital arm, as well as other key departments.

As Binance hired more widely from traditional financial and regulatory worlds, Zhao's tight control over his company was undiminished. The company, which calls itself an "ecosystem," has set up more than 70 entities, most controlled by Zhao personally.

"Zhao answers to no one but himself," the Commodity Futures Trading Commission wrote in March after suing Binance for operating what it called a "sham" compliance program.

© Reuters. Zhao Changpeng, founder and chief executive officer of Binance greets the audience during an event in Athens, Greece, November 25, 2022. REUTERS/Costas Baltas/File Photo

It is unclear whether Zhao will now relinquish control of the firms. In the meantime, one of his appointees will take over running Binance.

Richard Teng, a senior Binance executive who joined in 2021, is the new CEO, Zhao posted on social media on Tuesday. Teng "will ensure Binance delivers on our next phase of security, transparency, compliance, and growth," he said.

Latest comments

He still has the ownership stake, and I guarantee they assured him no prison time.
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Crypto world is full of scam and fraud... amazing how easy these crypto crooks can take the money of the crypto sheep herd. Easy like taking candy from a baby...
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Finally. Many who know about the Crypto industry have called the downfall of CZ for a long time. The whole industry is shady and Binance is no exception. The Crypto industry always had the "advantage" that regulation and the legal system are really slow and the Crypto industry moved really, really fast. But as slow as the legal system is, it still seems to work in the US. That's a huge relief.
Not good enough jail is too good for a child porn allower.
If you have enough money you can walk away with anything. What an equitable legal system! lol
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