- [Narrator] For years,
Binance's, founder Changpeng Zhao, better known as CZ, repeated a promise. - Binance.com is embracing
regulations all around the world. There's a very strong need for exchange that want to operate everything properly. We welcome anyone to look under
the hood for our business. I think we run a very clean business. - [Narrator] That his global
cryptocurrency exchange would follow the rules
and his company grew. In 2021, its monthly
trade volume was greater than the next four biggest
exchanges combined. But behind the scenes, Binance
was dodging regulations and some naysayers said
that the exchange was- - A walking time bomb. - [Narrator] Now, CZ
has stepped down as CEO and pleaded guilty to
criminal charges in the US. His company will also plead guilty and agree to pay fines
totaling $4.3 billion. - Binance became the largest cryptocurrency exchange in the world. Now Binance is paying one of the largest corporate
penalties in US history. - [Narrator] Here's how
Binance skirted regulations to rise to the top before that same strategy
brought it crashing down. - I think the value
system is a key ingredient that drove us to the success very quickly. - [Narrator] This is CZ. Back in 2018, he started
the company a year earlier. Within six months, Binance
surpassed older exchanges to become the largest exchange
in the world by trade volume. That's partly because CZ set Binance's sites ongoing global early on. But as it grew, Binance
ran into regulatory issues almost immediately. First with its original
headquarters in China where the government banned
crypto exchanges soon after Binance was founded. - So we generally don't like
to go up against governments. So we moved out of China. We are actually not, I mean Tokyo right now personally. - [Narrator] And again
after moving to Japan, which warned the company against conducting
trades without a license. And after that, Binance stopped disclosing where it was based. - They won't say it's
meant to break rules, but basically gave them
the edge to serve customers from so many different parts of the world. - So Binance doesn't have a bank account, doesn't have an office. So we're moving away
from the company concept. We're really just an organization or a community that's working together. - [Narrator] But that's also when Binance's lack of a home base started to make operations
more complicated, especially in the US. About a fifth of Binance's
users at the time were based there. Binance's chief compliance
officer at the time messaged a colleague. "We are operating as a (beep)
unlicensed security exchange in the USA bro," according to an SEC filing. - US regulators are known
for being sort of tough and a lot of times like the first to really start looking at something. And the tendency is that other countries start following whatever the US does. - [Narrator] In order
to comply with rules, the company launched Binance
US in September of 2019. It says the plan was for the site to use
Binance's technology and brand, but operate independently of the original company and CZ. But behind the scenes- - It was pretty clear
based on the dialogues that the intention there
was to create a site that was for the US users only, but also at the same time
allow us users to continue to tap on the larger
website to do the trading and bring US money in to the exchange. - Both the SEC and the
DOJ started investigating the company's actions and sent subpoenas to finance in 2020 and other countries followed suit. - As one of the largest industry players in the in the world, we welcome regulations. - Despite mounting skepticism, the company still continued to grow. At the beginning of 2022, CZ's net worth was estimated to briefly jump to nearly $100 billion, ranking him among CEOs
like Mark Zuckerberg and Warren Buffett. - He makes it his persona be quite relaxed and kind of easygoing. We know though that when
he's working and at work, he is pretty tough. According to all these US authorities that brought cases
against Binance, in fact, CZ is extremely driven to make money. - [Narrator] But in 2023 following months of cratering crypto prices and the collapse of FTX and other firms, things began to fall apart. In March. The CFTC sued Binance alleging that the company was continuing to operate illegally in the US. In May, the company pulled out of Canada, its only major market
in North America citing changes in regulation. Then in June, the SEC
filed a lawsuit against CZ and Binance claiming that CZ had continued to maintain undisclosed
control over Binance US. More countries began investigations and the company pulled out of others, particularly in Europe. In July, Binance laid off
an eighth of its staff and a number of core
executives left the company. Then in November, Binance planned to pay the Department of Justice
$4.3 billion in fines and plead guilty to a criminal charge. CZ pleaded guilty to violating anti-money
laundering requirements, a deal that may allow the
company to continue operating. However, he will maintain
his majority ownership. - Rather than implement the basic anti-money laundering safeguards that his team recommended, safeguards required by US law, Binance and its founder operated as though the rules didn't apply. - [Narrator] In a statement on X, he said that he's stepping down as CEO and will take a break. He also said that user funds are SAFU. A Binance term, implying
that they are safe. Richard Tang, Binance's
former head of global markets will step in as CEO. - As part of the settlement, Binance will have to comply
with several, several rules and that means you're gonna have a lot of or much tougher oversight from US authorities on exchange. The question now is, can Binance survive without CZ? - [Narrator] Binance declined to comment, but said in a public statement, "These resolutions acknowledge
our company's responsibility for historical criminal
compliance violations and allow our company to turn
the page on a challenging yet transformative chapter
of learning and growth." It's unclear how the
fallout of the charges for the world's largest crypto exchange could affect the broader market.
