In the days leading up to a landmark settlement with the U.S. Department of Justice, Binance, one of the largest cryptocurrency exchanges, reportedly transferred a staggering $3.9 billion in Tether (USDT) between its wallets. This move has sparked intrigue in the crypto community, as it coincides with the company's CEO Changpeng Zhao (CZ) pleading guilty to several allegations levied by U.S. authorities.
The hefty transfer, completed on November 9, involved moving funds from Binance's cold storage wallet, known as Binance-Cold 2, to another wallet within the company, dubbed Binance 3. This wallet, as per on-chain data, now holds approximately $6.6 billion, with $4 billion in USDT and the remainder in various stablecoins like Decentraland USD (USDD) and TrueUSD (TUSD).
This transaction is notable not only for its size but also for its timing. It falls within the range of the $4.3 billion that Binance is mandated to pay as part of its settlement agreement with the U.S. government. The specifics of how Binance plans to utilize these funds, whether for the settlement or other purposes, remain unclear. Historically, the company has indicated that its cold wallets contain the bulk of its reserves.
This significant financial activity comes amidst news that Binance was in discussions with the U.S. Justice Department over a potential settlement involving fines exceeding $4 billion. In a federal court in Seattle on Tuesday, Zhao formally pleaded guilty to charges including violations of the Bank Secrecy Act, anti-money laundering regulations, and U.S. sanctions.
As a consequence of the settlement, Zhao announced his resignation as Binance's CEO, a role he has held since founding the company. In a statement on social media, Zhao expressed emotional difficulty in stepping down but acknowledged the necessity of taking responsibility for his actions. He introduced Richard Teng as his successor, stating, "This is best for our community, for Binance, and for myself."
The settlement, which includes the Justice Department, Treasury Department, and Commodity Futures Trading Commission (CFTC), effectively concludes their years-long investigation into Binance. It entails a fine of $4.3 billion for Binance and a personal fine of $50 million for Zhao.
As the crypto world continues to evolve and face regulatory scrutiny, Binance's recent actions and the resulting settlement mark a significant chapter in the industry's ongoing journey towards compliance and legitimacy.
