Binance, the world’s largest virtual currency exchange, agrees to pay $5.7 billion fine, withdraw from U.S. market.

Changpeng Zhao (right), the founder and CEO of Binance, the world’s largest cryptocurrency exchange, is leaving a federal court in Seattle on the 21st (local time) after pleading guilty to violating U.S. anti-money laundering laws./Seattle Times·AP·Yonhap News

Binance, the world’s largest cryptocurrency exchange, has pleaded guilty to charges of brokering transactions with U.S. sanctions targets, including North Korea, and failing to implement anti-money laundering measures. The company has agreed to pay a record fine and withdraw from the U.S. market in agreement with the U.S. government.

The U.S. Department of Treasury and Department of Justice announced on the 21st (local time) that they have taken unprecedented measures against Binance and its affiliates, which handle about 60% of global cryptocurrency transactions, holding them accountable for violations of anti-money laundering laws (AML) and sanctions laws. Binance has pleaded guilty to charges of violating the Bank Secrecy Act (BSA) and International Emergency Economic Powers Act (IEEPA), and has agreed to pay a fine of $4.368 billion (about 5.66 trillion KRW) to the U.S. government.

Changpeng Zhao, a Chinese-Canadian who founded Binance, has admitted to violating the Bank Secrecy Act for failing to operate an effective anti-money laundering program and has resigned from his position as CEO.

The Financial Crimes Enforcement Network (FinCEN) of the Treasury Department’s settlement agreement requires Binance to pay a civil fine of $3.4 billion (about 4.4 trillion KRW), be under surveillance for five years, and completely withdraw from the U.S., among other significant regulatory commitments, according to the Treasury Department. The $3.4 billion settlement is the largest fine in the history of the Treasury Department and FinCEN, the department said.

In addition, the Office of Foreign Assets Control (OFAC) of the Treasury Department has imposed a fine of $968 million (about 1.25 trillion KRW) on Binance.

U.S. Treasury Secretary Janet Yellen (center) is holding a press conference at the U.S. Department of Justice in Washington D.C. on the 21st (local time) with Attorney General Merrick Garland (left) and Deputy Attorney General Lisa Monaco./AFP·Yonhap News

The Treasury Department pointed out that Binance intentionally failed to report more than 100,000 suspicious transactions to FinCEN, related to transactions involving the armed group Al-Qassam Brigades of Hamas, the Palestinian Islamic Jihad (PIJ), the Islamic State (ISIS) in Iraq and Syria, ransomware profits, child exploitation websites, and darknet markets for illegal trade in drugs, counterfeits, and smuggled goods.

From August 2017 to October 2022, Binance facilitated 1,667,753 virtual currency transactions (totaling $760,681,127 or about 900 billion KRW) between U.S. customers and users in sanctioned regions such as Iran, North Korea, Syria, Cuba, and the Crimean Peninsula in Ukraine, the Donetsk People’s Republic (DNR), and the Luhansk People’s Republic (LNR) through its platform.

Binance violated sanctions against North Korea by facilitating a total of 80 virtual currency transactions, totaling $4,374,588 (about 5.7 billion KRW), between U.S. customers and users in North Korea.

As part of the guilty plea agreement, Binance will not only pay a record amount of fines but also completely withdraw from the U.S. market, the Treasury Department announced.