In this lesson
- find out why the world's biggest crypto exchange pleaded guilty in the USA in 2023
- understand what anti-money-laundering rules are and why exchanges must follow them
- learn what happened next: prison, the pardon, the SEC case and the EU licence
What happened to Binance and CZ? In November 2023 Binance, the world's largest crypto exchange, pleaded guilty in the USA to failing to run an anti-money-laundering program, operating as an unlicensed money transmitter and breaking sanctions, and agreed to pay about 4.3 billion dollars. Its founder Changpeng Zhao ("CZ") pleaded guilty to failing to maintain an effective anti-money-laundering program, stepped down as CEO and served four months in prison in 2024. In October 2025 US President Donald Trump pardoned him.
The story is not about a hacker in a hoodie or a vanished founder. It is about something more boring – and precisely because it is boring, it got very expensive: paperwork. Checking who your customers are is dull. Not checking cost Binance more than many countries spend on their army in a year.
What is Binance and who is CZ?#
Binance was founded in 2017 and within months became the largest crypto exchange in the world by trading volume. Its founder and CEO Changpeng Zhao, known as CZ, was one of the most famous people in crypto. Binance was proud of not having a classic headquarters – which also meant it was hard to say which country's rules applied.
Timeline#
| Date | What happened |
|---|---|
| July 2017 | Binance launches |
| 2017–2022 | According to US authorities, Binance serves US customers without proper checks |
| June 2023 | The SEC sues Binance and CZ (unregistered securities, misleading investors – all denied) |
| 21 November 2023 | Binance and CZ plead guilty; Binance agrees to pay about $4.3 billion; CZ steps down as CEO |
| 30 April 2024 | CZ is sentenced to 4 months in prison (prosecutors had asked for 3 years) |
| September 2024 | CZ is released |
| May 2025 | The SEC drops its civil case against Binance and CZ with prejudice |
| 23 October 2025 | President Trump pardons CZ |
| June–July 2026 | Binance withdraws its MiCA licence application in Greece and stops serving new EU customers |
| September 2026 | Media report a new US investigation into Iran-linked trading on Binance; no charges as of October 2026 |
What did Binance plead guilty to?#
The core of the case was AML – anti-money-laundering rules. An exchange that moves money for the public must know its customers (KYC), watch for suspicious transfers and report them. According to the US Department of Justice and the Treasury:
- Weak identity checks. For years, many users could trade without verifying who they were.
- No suspicious-activity reports. Binance did not report transactions linked to ransomware, darknet markets, scams and groups designated as terrorist organisations.
- Sanctions. Binance matched trades between US users and users in sanctioned places such as Iran, North Korea, Syria and Crimea. The Treasury's OFAC counted about 1.67 million apparent violations.
- Unlicensed money transmission. Binance served US customers without registering as a money transmitting business.
Several agencies acted at once: the Department of Justice, the Treasury's FinCEN (3.4 billion dollars) and OFAC (968 million) and the CFTC. Their penalties partly overlap – one payment counts toward several of them – so in total Binance paid about 4.3 billion dollars: roughly 2.5 billion in forfeiture plus a 1.8 billion criminal fine. Binance also accepted independent compliance monitors. Attorney General Merrick Garland said Binance became the largest exchange "in part because of the crimes it committed".
CZ personally pleaded guilty to one count – causing Binance to fail to maintain an effective AML program – and paid a 50 million dollar fine. Note what he did not plead to: he was not charged with stealing customer money. That is the key difference from FTX.
The sentence, the pardon and the dropped cases#
Judge Richard Jones sentenced CZ to four months, far less than the three years prosecutors wanted. CZ served his time and was released in September 2024. Binance continued under a new CEO, Richard Teng.
In 2025 the political climate in Washington changed. In May the SEC dropped its civil lawsuit against Binance and CZ for good, saying it was a policy decision. On 23 October 2025 President Trump pardoned CZ. The White House described the prosecution as part of the previous administration's "war on cryptocurrency"; critics in Congress pointed to business ties between Binance and the Trump family's crypto venture World Liberty Financial and called the pardon improper. A pardon removes the punishment, but it does not change what CZ admitted in court in 2023.
Where does Binance stand in Europe?#
In the EU, every crypto exchange needs a MiCA licence after the transition period. In June 2026 Binance withdrew its application in Greece and, from July 2026, stopped accepting new customers and new deposits in several EU countries; existing users can still withdraw. Binance said it wants to reapply through another member state. More on how to check a licence: Choosing a licensed exchange.
Warning signs you could have seen#
- "We have no headquarters." It sounds modern, but it often means no regulator is fully watching.
- Easy sign-up with no ID check. Convenient for you – and for criminals. An exchange that skips KYC is ignoring the law somewhere.
- "Not available in your country"… but it still works. If a platform officially excludes your country but lets you in anyway (for example with a VPN), it is breaking somebody's rules, and you have no protection.
- No licence where you live. Size and fame are not a licence.
Your money on an exchange depends on its legal standing
When an exchange gets into trouble with regulators, accounts can be restricted, products closed or whole countries cut off – sometimes overnight. Use exchanges licensed where you live, keep there only what you actively trade and move long-term savings to your own wallet.
Common myths#
- "Binance stole customer money like FTX." No court found that. The case was about anti-money-laundering failures, sanctions and licensing.
- "The pardon means CZ was innocent." A pardon cancels the punishment. The guilty plea remains a fact.
- "The biggest exchange must be the safest." Size did not protect Binance from a record fine or from losing access to the EU.
Summary
- In November 2023 Binance pleaded guilty to AML, licensing and sanctions violations and paid about $4.3 billion.
- CZ pleaded guilty to failing to maintain an effective AML program, served 4 months and was pardoned in October 2025.
- The SEC dropped its separate civil case in May 2025.
- As of October 2026 Binance has no MiCA licence and does not take new EU customers.
- KYC and AML checks are not red tape; they are what makes an exchange legal.
Sources#
- US Department of Justice – Binance and CEO plead guilty (2023) (opens in a new tab)
- US Treasury – settlements with Binance (FinCEN and OFAC) (opens in a new tab)
- CNBC – SEC drops its Binance lawsuit (2025) (opens in a new tab)
- CNBC – Trump pardons Binance founder Changpeng Zhao (2025) (opens in a new tab)
- Euronews – Binance halts services in EU countries (2026) (opens in a new tab)