Binance and its founder, Changpeng Zhao, confessed to violating U.S. regulations on money laundering and financing terrorism, agreeing to settle with a $4.3 billion fine.
The U.S. Department of Justice initiated its investigation into Binance several years back, coinciding with similar actions by various U.S. regulatory bodies targeting cryptocurrency exchanges.
To provide a breakdown: On February 15, Binance faced suspicion since 2018 and had been the subject of numerous U.S. law enforcement investigations, some dating back to that year.
By March 1, the U.S. Congress, spearheaded by Senators Elizabeth Warren, Chris Van Hollen, and Roger Marshall, cast a spotlight on Binance. They directed inquiries to CZ and Binance.US CEO Brian Shroder, seeking clarification on multiple allegations and a detailed review of the company's financial status. Dissatisfied with the response, the executives later faced accusations of deception.
On March 27, the U.S. Commodity Futures Trading Commission (CFTC) initiated legal action against Zhao, along with chief compliance officer Samuel Lim and Binance. They were accused of seven trading violations and market manipulation. The CFTC's investigation began in 2021, which Zhao vehemently denies.
By May 5, Bloomberg reported that the U.S. Department of Justice had launched an investigation into Binance for allegedly breaching sanctions related to Russia. Despite the scrutiny, Binance continued its operations in Russia until September.
On June 5, the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Binance, Binance.US, and Zhao, citing 13 charges. These included allegations of selling unregistered securities, permitting U.S. customers to use the Binance exchange, mingling customer funds with company assets, and facilitating laundering activities for sales.
July 6 marked the beginning of a leadership exodus at Binance, where four key members of the Binance.US team departed, sparking a series of departures that continued for several months.
By August 2, reports surfaced that the Justice Department was contemplating bringing fraud charges against Binance. The department leaned towards imposing fines or seeking non-prosecution agreements to prevent potential turmoil within the exchanges.
On August 14, Binance.US took defensive measures against the SEC, filing for a protective order to halt what it described as an intrusive discovery process. The exchange asserted its adherence to good faith during the proceedings.
Between September 13 and 14, Binance.US underwent significant internal changes, laying off approximately one-third of its workforce, approximately 100 employees, while CEO Schroeder also resigned. During this time, the SEC raised objections about Binance's lack of cooperation in the discovery phase.
September 19 witnessed a minor legal win for Binance.US when a court denied the SEC access to the exchange's software. Instead, the court suggested that the SEC provide more specific details in its discovery requests.
On September 21, Binance sought dismissal of the SEC's lawsuit. Zhao, Binance, and Binance.US jointly filed a plea to dismiss the case, arguing that the SEC misinterpreted securities laws and applied its authority retroactively. The SEC responded, calling Binance's interpretation of the law "painful."
October 23: Binance aims to dismiss CFTC lawsuit by filing a motion for dismissal, arguing that a CFTC victory would grant excessive power to regulate global cryptocurrency derivative activities. The exchange contends that the courts should reject the agency's attempt to expand its jurisdiction beyond statutory limits.
October 26: CZ's wealth takes a hit, marked by a sharp decline in the Bloomberg Billionaires Index, plummeting Zhao's ranking from the 11th richest individual to a lower 95th position. His estimated personal wealth plunged from $96.9 billion to $17.3 billion, but as of the latest November list, he's back up to No. 68.
On the same day, Senator Cynthia Lummis and Representative French Hill urged the Department of Justice to act against Binance and Tether for evading sanctions, prompted by Binance's freezing of accounts tied to Hamas two weeks earlier.
November 21: Legal action against CZ and Binance ensues. A government indictment was filed on November 14 against Binance and Zhao Yun in Washington state. The documents were unsealed on November 21, prompting Zhao's resignation from Binance as part of the agreement.
