Binance CEO Could be Facing Money Laundering Charges

Binance and its CEO and founder Changpeng Zhao, better known as CZ, could reportedly be facing charges for money laundering conspiracy and other violations in the US.

The potential charges are – at this point – still just a possibility, with opinions on the matter reportedly divided the within US Department of Justice (DOJ). The disagreement in the department now appears to be causing a delay in the conclusion of a long-running investigation of Binance and its top executives, Reuters reported on Monday.

According to the Reuters report, Binance, known as the world’s largest crypto exchange by trading volume, has been under investigation by the DOJ since 2018. The investigation is reportedly focused on money laundering conspiracy, unlicensed money transmission, and criminal sanctions violations.

The report cited four people “familiar with the matter” as its sources.

Some of the people who are part of the investigation at the DOJ believe the agency already has enough information to be “moving aggressively against the exchange” and file criminal charges, the report said. Others inside the DOJ, however, have argued that they still need more time to review evidence.

The options now being weighed by the DOJ include bringing indictments against Binance, negotiate a settlement, or close the case without further action, the sources said.

The investigation is said to be focused on Binance itself, CEO Changpeng Zhao, and other unnamed executives at the exchange.

Plea deal discussed

Per three of the sources cited in the Reuters piece, a potential plea deal has been discussed between Justice department officials and Binance attorneys.

Asked to comment on the story, a Binance spokesperson said:

“We don’t have any insight into the inner workings of the US Justice Department, nor would it be appropriate for us to comment if we did.”

Binance under increasing scrutiny

Binance has come under increasing scrutiny in the weeks following the collapse of rival exchange FTX, with some claiming that Binance employs many of the same business methods as FTX did.

Earlier this week, it was reported that Binance’s new proof-of-reserves report has already raised red flags, with some experts claiming it is far from enough to satisfy worried users.

The so-called proof-of-reserves report was released on December 7 in the form of a 5-page PDF document prepared by the global accounting firm Mazar’s South African branch. The report was based purely on an “Agreed-Upon Procedures (“AUP”) engagement,” and is therefore limited in scope.

On Tuesday, speculation around Binance’s financial position intensified, with many prominent crypto community members urging their followers to get their coins off Bianance, as well as any other exchange for that matter.

Get 👏
Your 👏
Coins 👏
Off 👏
The 👏
Exchange 👏

— Preston Pysh (@PrestonPysh) December 13, 2022

Others pointed to the massive outflows that have already been seen on the exchange:

https://www.twitter.com/WallStreetSilv/status/1602752031126700034

Despite the seemingly massive outflows, CZ himself appeared calm on Twitter, saying “we saw some withdrawals today.”

“We have seen this before […] Business as usual for us,” he wrote, before even encouraging his followers to “stress test” exchanges by making withdrawals from exchanges from time to time.

We saw some withdrawals today (net $1.14b ish). We have seen this before. Some days we have net withdrawals; some days we have net deposits. Business as usual for us.

I actually think it is a good idea to “stress test withdrawals” on each CEX on a rotating basis. 💪

1/2 https://t.co/uF9lLPDSyS

— CZ 🔶 BNB (@cz_binance) December 13, 2022