In a recent development following the legal battle between the DoJ and Binance, Judge Brian Tsuchida, the Chief United States Magistrate Judge for the Western District of Washington, Seattle, ruled for the release of Binance founder and former CEO Changpeng “CZ” Zhao on a $175 million personal recognizance bond while awaiting sentencing.
The court proceeding, which was held on Tuesday, November 21, 2033, saw CZ pleading guilty to violating the Bank Secrecy Act, with a sentencing hearing scheduled for February 23, 2024, at 9:00 A.M. Pacific Time.
Binance, SEC, and CFTC
The legal battle between Binance, the SEC, and the CFTC began in March 2023. The CFTC filed a civil enforcement action in the U.S. District Court for the Northern District of Illinois, charging Changpeng Zhao and three entities operating the Binance platform with numerous violations of the Commodity Exchange Act (CEA) and CFTC regulations.
It also charged Samuel Lim, Binance’s former chief compliance officer, with aiding and abetting Binance’s violations while alleging that Binance illegally offered and executed commodity derivatives transactions to and for U.S. customers, among other violations.
Additionally, in June 2023, the SEC filed 13 charges against Binance entities and CZ, alleging that Binance.com and Binance.US operated as exchanges, brokers, dealers, and clearing agencies without registering as such.
The charges included the unregistered offer and sale of securities, misleading Binance.US customers and equity investors, and the unregistered operation of a national securities exchange.
The legal battle has advanced to a $4.3 billion settlement announced on November 21, 2023, which includes a $50 million fine for CZ and a $4.3 billion fine for Binance, as well as CZ’s agreement to step down as the CEO of Binance.
The charges against Binance also include settlements with the Financial Crimes Enforcement Network (FinCEN), Office of Foreign Asset Control (OFAC), and the Commodity Futures Trading Commission.
CZ’s release terms permit him to travel to and from his home in the UAE but require him to return to the United States 14 days before the sentencing date. The founder, facing a potential 10-year prison term, is expected to serve no more than 18 months under the plea agreement.
Further information about the case reveals that CZ is posting $15 million held in a trust account by Davis Wright Tremaine, separate from the bond, and agreeing to forfeit funds if the release terms are violated. While Judge Brian noted that despite the guilty plea, CZ’s right to appeal any sentence over 18 months is waived.
Binance new CEO
As the case continues to unfold, Binance faces not only a change in its CEO (now Richard Teng) and the payment of fines but also increased scrutiny from multiple regulators over the next five years.
These developments have sparked significant concerns in the crypto market, considering that Binance is one of the largest crypto firms globally, with CZ holding considerable influence in the industry. Despite the legal circumstances, the former CEO has reassured that customer funds are secure and the new leadership can guide Binance toward a brighter future.