A chronology of Binance’s legal battles in the US

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Former Binance CEO Changpeng “CZ” Zhao was sentenced to four months in prison on April 30 in a Seattle courtroom for violating U.S. money laundering laws, following years of investigations by United States authorities.

During the hearing, Judge Richard Jones expressed that there was no evidence to suggest Zhao had been informed of any illegal activities at Binance, rejecting a recommendation from the Department of Justice (DOJ) to increase the sentencing guideline.

A four-month sentence — along with billions of dollars in fines — may look like a light punishment through the eyes of U.S. authorities, as they have been investigating the former executive and its crypto empire for the past six years. From 2018 to 2024, Binance was targeted by several probes involving the DOJ, the Securities and Exchange Commission (SEC), and the Commodity Futures Trading Commission (CFTC), among other agencies.

Cointelegraph’s timeline of the events highlights the crackdown on Binance over the past few years. Here’s what happened:

February 2018: Department of Justice begins to investigate Binance

U.S. authorities have been after Binance since 2018, when the Department of Justice reportedly launched an investigation into the exchange’s compliance with U.S. Anti-Money Laundering (AML) laws and sanctions. At the time, prosecutors were investigating charges related to unlicensed money transmission, money laundering conspiracy and criminal sanctions violations.

In March 2021, the Commodity Futures Trading Commission also probed whether the company offered crypto derivatives to U.S. customers without registering with the agency.

Source: U.S. SEC

February 2022: Binance Holdings and Binance.US under investigation by the SEC

The U.S. SEC launched an investigation into the connection between Binance.US and trading firms Sigma Chain AG and Merit Peak, looking into how the firms disclosed potential links to users.

In June 2022, the SEC reportedly initiated another investigation, this time into Binance Holdings’ 2017 initial coin offering (ICO) over potential unregistered securities sales.

March 2023: SEC, CFTC accuses Binance and CZ of several violations

Binance CEO Changpeng “CZ” Zhao, compliance chief Samuel Lim, and the exchange were sued by the Commodity Futures Trading Commission (CFTC) for seven counts of trading irregularities and market manipulation. At the time, Binance had a daily trading volume of over $8.5 billion.

Zhao rejected the allegations, arguing that the crypto exchange did “not trade for profit or ‘manipulate’ the market under any circumstances.”

May 2023: DOJ targets Binance once again

The DOJ launched another investigation over Binance in May, focusing on potential violations of U.S. sanctions by allowing Russians to access the cryptocurrency exchange. 

The probe was part of a broader investigation by the DOJ’s national security division. Although Binance restricted its services in Russia following sanctions imposed in April 2022, it continued to operate in the country until September.

June 2023: Binance and CZ are sued by the SEC

The SEC filed charges against Binance and CZ for violations of securities law, focusing on issues like inadequate market oversight and potential wash trading. 

Among the allegations behind the charges are claims that Binance failed to restrict U.S. investors from using Binance.com and that Binance.US engaged in wash trading through its “primary undisclosed ‘market making’ trading firm Sigma Chain,” a company owned by CZ.

In addition, the suit claimed that funds from Binance and Binance.US were commingled into an account controlled by CZ-associated Merit Peak Limited.

Binance.US’s U.S. activities were drastically reduced after the SEC obtained an emergency restraining order against the exchange.

July 2023: Binance leadership departs 

As investigations surrounding the crypto exchange intensified, senior executives on Binance.US team left the company, starting a wave of departures across Binance’s firms that continued for months, resulting in at least ten key executives leaving the company.

Source: Binance.US

August 2023: DOJ fears bank run on Binance

As the DOJ considered fraud charges against Binance, authorities expressed concern about the possibility of a bank run affecting consumers. At the time, the DOJ was reportedly considering alternatives to criminal charges, such as fines or non-prosecution agreements, to mitigate harm to customers.

September 2023: Binance.US cuts staff, CEO resigns

Binance.US laid off a third of its workforce — about 100 people — and CEO Shroder also departed last September. 

In addition, the SEC complained to the court about Binance’s lack of cooperation in its discovery process. According to the regulator, Binance.US’s parent company provided unintelligible screenshots and unsigned, undated documents.

November 2023: Binance and CZ indicted

In a major turning point, CZ stepped down as CEO following a $4.3 billion settlement with U.S. authorities. The settlement included fines for violations like failing to maintain an effective Anti-Money Laundering program. Richard Teng took over as CEO of Binance.

As part of a settlement over criminal and civil cases, Zhao pleaded guilty to one felony charge. “I made mistakes, and I must take responsibility,” said CZ. “This is best for our community, for Binance, and for myself. […].”

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