Court unseals indictments against Binance and CZ, detailing expected guilty pleas

Regulation

A federal court has released the indictments against Binance and CEO Changpeng “CZ” Zhao filed under seal on Nov. 14, in which the United States government said it expected the cryptocurrency exchange and CZ to enter guilty pleas. 

In Nov. 14 filings in U.S. District Court for the Western District of Washington at Seattle, the U.S. government said it requested to file the indictments against Binance and CZ under seal as any potential plea deals with the exchange and CEO as well as regulatory settlements were “likely to have a major effect on the company, its customers, and global cryptocurrency markets.” Authorities charged CZ with one felony count for failure to maintain an effective anti-money laundering program at Binance, violating the Bank Secrecy Act.

“On the day of the plea hearings, the Government anticipates that the criminal resolutions with Defendant Zhao and Defendant Binance will be announced simultaneously with significant civil resolutions by the U.S. Department of the Treasury Office of Foreign Assets Control [OFAC], the U.S. Department of the Treasury Financial Crimes Enforcement Network [FinCEN], and the Commodity Futures Trading Commission [CFTC],” said the Nov. 14 filing, adding:

“While Binance is not a publicly traded company, Binance is the largest cryptocurrency exchange in the world and news related to Zhao and Binance’s criminal and civil liability is likely to have a significant effect on trading of various cryptocurrencies.”

“Cryptocurrency markets are volatile, subject to significant swings based on external events,” said the filing. “Here, given the status that Binance and Zhao have among participants in the cryptocurrency and related markets, even the simple docketing of a federal criminal case against either would by itself have a significant market impact.”

The government compared potential volatility in the price of Binance Coin (BNB) to that of the FTX Token (FTT) when the crypto exchange collapsed in November 2022, and former CEO Sam “SBF” Bankman-Fried was indicted on federal fraud charges. SBF was subsequently found guilty on seven charges and awaits sentencing in March 2024. 

According to court records, lawyers representing Binance and CZ appeared in court for separate hearings scheduled on the morning of Nov. 21 to discuss pleas and possible detention. Attorneys for CZ filed sealed motions concerning the Binance CEO’s conditional release pending sentencing in the case, but the contents were not available at the time of publication.

Source: U.S. District Court for the Western District of Washington at Seattle

Related: Binance $3.9B USDT move gains community attention amid DOJ settlement claims

A settlement for many of the criminal and civil cases against Binance and CZ in the United States is expected to be announced at 8:00 pm UTC on Nov. 21 as part of a joint statement by the Justice Department, CFTC, and Department of the Treasury. According to many reports, CZ has agreed to plead guilty, and Binance will pay more than $4 billion as part of the settlement.

It’s unclear at the time of publication if any part of the announcement will concern Binance’s pending civil case with the U.S. Securities and Exchange Commission (SEC). In June, the regulator filed 13 charges against the crypto exchange, Binance.US, and CZ for securities law violations.

Magazine: Binance’s exec exodus, Nasdaq to trade AI orders and SBF loses bail appeal: Hodler’s Digest, Sept. 3-9

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