Binance founder Changpeng Zhao admits 'mistakes'

He pleads guilty to breaking anti-money laundering laws as part of a $4.3 billion settlement with the US Department of Justice

Changpeng Zhao, founder of Binance, leaves the federal court in Seattle, Washington, on Tuesday. Bloomberg
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Binance’s former chief executive Changpeng Zhao, who has pleaded guilty to breaking anti-money laundering laws as part of a $4.3 billion settlement with the US Department of Justice, said he made mistakes and takes responsibility for the fiasco.

US federal prosecutors on Tuesday revealed sweeping allegations against the world’s biggest cryptocurrency exchange and its 46-year-old founder.

“I know it is the right thing to do. I made mistakes, and I must take responsibility. This is best for our community, for Binance, and for myself,” Mr Zhao, who founded Binance in 2017, said in a post on X.

“Binance is no longer a baby. It is time for me to let it walk and run. I know Binance will continue to grow and excel with the deep bench it has.”

The company has admitted it engaged in anti-money laundering, unlawful money transmitting and sanctions breaches.

Mr Zhao, a Canadian citizen, is also accused of failing to maintain an effective anti-money laundering programme, in breach of the US Bank Secrecy Act.

He has been released on a $175 million personal recognisance bond secured by $15 million in cash.

The conditions for his release include staying away from unlawful activities, tampering with witnesses and consuming non-prescribed controlled substances.

What’s next for Mr Zhao?

Mr Zhao’s sentencing hearing is scheduled for February 24. The order allows him to leave the US but he is required to return 14 days before sentencing.

Prosecutors are seeking an 18-month prison sentence, according to a New York Times report.

In the meantime, Mr Zhao said he will take a break and do some passive investing.

“I have not had a single day of real [phone-off] break for the last six-and-a-half years. After that, my current thinking is I will probably do some passive investing, being a minority token/shareholder in start-ups in areas of blockchain/Web3/DeFi, AI and biotech,” Mr Zhao said.

He denied speculations about launching a new start-up.

“I can’t see myself being a CEO driving a start-up again. I am content being a one-shot [lucky] entrepreneur,” he said.

“I will remain available to the team [Binance] to consult as needed, consistent with the framework set out in our US agency resolutions … I may be open to being a coach/mentor to a small number of upcoming entrepreneurs, privately.”

Full confidence in new CEO

Richard Teng, the company's former global head of regional markets, has been appointed the new chief executive.

Mr Zhao said the new boss will ensure Binance delivers on its next phase of security, transparency, compliance and growth.

“Richard is a highly qualified leader and, with over three decades of financial services and regulatory experience, he will navigate the company through its next period of growth.”

Who benefitted from Binance’s suspicious transactions?

Binance is the world’s largest virtual currency exchange, responsible for an estimated 60 per cent of centralised virtual currency spot trading.

Its violations include “failure to implement programmes to prevent and report suspicious transactions with terrorists … ransomware attackers, money launderers, and other criminals”, the US Treasury Department said in a statement.

Updated: November 22, 2023, 12:58 PM