Former Binance CEO Changpeng Zhao is ordered NOT to leave the United States after he pleaded guilty to US anti-money laundering laws

Former Binance chief Changpeng Zhao has been ordered not to leave the US for the time being, after the founder of the world's largest cryptocurrency exchange pleaded guilty to violating anti-money laundering laws.

The founder of the world's largest crypto currency exchange previously agreed to a deal to step down from the company after he pleaded guilty to violating anti-money laundering rules in a deal that will see the crypto exchange pay $4.3billion in fines. 

Zhao will be required to stay in the United States until the Seattle court considers whether he should remain through his sentencing hearing in February, or if he should be allowed to return to United Arab Emirates, where he is a citizen.

US District Court Judge Richard Jones said Zhao - who flew to the US from the United Arab Emirates for his guilty plea - 'until such time as this Court resolves the Government's motion for review.' 

The UAE has no extradition treaty with the US, with Zhao's attorneys calling his 'voluntary' attendance a sign of good faith.  

Zhao, an arch-rival of Sam Bankman-Fried's FTX, was released on a $175million bond Tuesday with sentencing scheduled for February 23, 2024. 

The deal was agreed to last Tuesday. However, Zhao reportedly plans to maintain majority ownership of the firm, founded in 2017.

The court has also recommended Zhao pay a $50 million fine and is barred from all involvement with Binance. He is expected to be sentenced at a later date. 

Following the guilty plea, Zhao wrote on X: 'Today, I stepped down as CEO of Binance.' 

'Admittedly, it was not easy to let go emotionally. I made mistakes, and I must take responsibility.' 

'This is best for our community, for Binance, and for myself. 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.'

Binance also pleaded guilty to a criminal charge and agreed to the hefty $4.3billion fine, which includes amounts to settle civil suits by regulators against the company. 

The company will pay $1.81 billion within 15 months, and a further $2.51 billion forfeiture.

Richard Teng, Binance's former Global Head of Regional Market, was named the new CEO. Zhao said Teng would 'ensure Binance delivers on our next phase of security, transparency, compliance, and growth.' 

The BNB cryptocurrency, a token that was created by Binance, dropped about five percent following news of the plea agreement. Earlier on Tuesday, the token hit a five-month high after reports that the DoJ would soon announce a settlement with the firm. 

The deal with the Justice Department, detailed in court filings, is part of a large settlement between the firm and other U.S. agencies, including the Commodity Futures Trading Commission (CFTC) and the Treasury Department.

Zhao and others were charged with violating the Bank Secrecy Act by failing to put in place an anti-money laundering program and for violating US economic sanctions. 

Binance's former chief compliance officer Samuel Lim will also be charged as part of the settlement, a source told Reuters, adding Binance will also be required to remediate its lapses.

Zhao's statement also noted that the deal with the government, the agencies 'do not allege that Binance misappropriated any user funds, and do not allege that Binance engaged in any market manipulation.'

The indictment against Zhao and Binance, unsealed on Tuesday, says the firm conducted an unlicensed money transmitting business, violating the International Emergency Economic Powers Act.

It accuses Zhao and Binance of being involved in a 'deliberate and calculated effort' to profit from the US market without obeying its rules.

The deal brings an end to years-long investigations by US regulators into Binance. It aims to allow Binance to continue to operate instead of collapsing, which would negatively affect markets and crypto holders. 

The US government was seeking to find a balance between cracking down on Binance and disrupting the sector altogether after several high-profile collapses last year, including the bankruptcy of Binance's former arch rival FTX. 

Following his guilty pela, Zhao said:  'With Richard and the entire team, I’m confident that the best days for Binance and the crypto industry lay ahead. As a shareholder and former CEO with historical knowledge of our company, I will remain available to the team to consult as needed, consistent with the framework set out in our U.S. agency resolutions.'

Zhao added: 'What’s next for me? I will take a break first. I have not had a single day of real (phone off) break for the last 6 and half years. After that, my current thinking is I will probably do some passive investing, being a minority token/shareholder in startups in areas of blockchain/Web3/DeFi, AI and biotech. I am happy that I will finally have more time to spend looking at DeFi.

'I can’t see myself being a CEO driving a startup again. I am content being an one-shot (lucky) entrepreneur. Should there be listeners, I may be open to being a coach/mentor to a small number of upcoming entrepreneurs, privately. If for nothing else, I can at least tell them what not to do.' 

Binance has been under the Justice Department's scanner since at least 2018.

Federal prosecutors at the agency asked the company in December 2020 to provide internal records about its anti-money laundering efforts, along with communications involving Zhao, who founded the company in 2017.

The CFTC in March filed civil charges against Binance, alleging it failed to implement an effective anti-money laundering program to detect and prevent terrorist financing.

Internally, Binance officers and employees acknowledged that the platform facilitated 'potentially illegal activities,' the CFTC alleged.

In February 2019, Binance's former Chief Compliance Officer Lim received information on transactions by the militant Palestinian group Hamas on Binance, the CFTC wrote.

Lim, a Singaporean, 'explained to a colleague that terrorists usually send "small sums" as "large sums constitute money laundering",' the CFTC said in its March lawsuit.

Zhao, a billionaire who was born in China and moved to Canada at the age of 12, said the CFTC's 'complaint appears to contain an incomplete recitation of facts, and we do not agree with the characterization of many of the issues alleged.'

The SEC alleged in 13 charges that Binance artificially inflated its trading volumes, diverted customer funds, failed to restrict US customers from its platform and misled investors about its market surveillance controls. 

The agency's lawsuit prompted investors to pull around $780 million from the crypto exchange, forced the company to eliminate about one third of its US workforce and trading balances have slowed to a trickle. 

Data firm Nansen said that Binance saw net outflows of $778.6 million of crypto tokens within 24 hours of the SEC lawsuit filing, and Binance registered net outflows of $13 million. 

Binance denied the SEC's allegations and said it would 'vigorously defend' its platform.

The SEC lawsuit against Binance came roughly eight months after the collapse of FTX, which was also accused of co-mingling customers' funds and investing the proceeds in high-risk investments that customers were unaware they were participating in. 

Days before FTX collapsed, Zhao said Binance would liquidate its FTT tokens, a cryptocurrency issued by FTX.

The Binance announcement triggered a run on the bank at FTX - but the company didn't have enough money to pay investors who wanted to withdraw their assets as customers tried to withdraw $6 billion in 72 hours. 

Bankman-Fried was eventually convicted of massive fraud against FTX costumers.