Major Crypto Exchange Pleads Guilty, Agrees To $297 Million Penalty; Founders Secure DPAs

On January 27, 2025, one of the largest global cryptocurrency exchange platforms (the “Exchange”) pled guilty to one count of operating an unlicensed money transmitting business and agreed to pay $297 million in connection with a grand jury indictment (the “Indictment”) brought by the Department of Justice (“DOJ”) in the Southern District of New York in March 2024. 

As part of the plea agreement, two of the Exchange’s founders, who were also indicted, entered deferred prosecution agreements (“DPAs”) for a two-year period.

In the Indictment, the DOJ charged the Exchange and its founders with four counts: (i) conspiracy to violate the BSA (18 U.S.C § 371); (ii) conspiracy to operate an unlicensed money transmitting business (18 U.S.C. § 371); (iii) failure to implement effective AML controls (31 U.S.C. §§ 5318(h)(1), 5322(b)-(c); 18 U.S.C. § 2; C.F.R. §§ 1026.210,1026.220); and (iv) operation of an unlicensed money transmitting business (18 U.S.C §§ 1960, 1962).

Specifically, the DOJ accused the Exchange and its founders of, inter alia:

1. Failing to implement an effective anti-money laundering (“AML”) program, in violation of the Bank Secrecy Act (“BSA”);
2. Operating an unlicensed money transmitting business by allowing registered users to place orders for spot trades in cryptocurrencies, such as Bitcoin;
3. Acting as a futures commission merchant by enabling registered users to place derivative trades tied to cryptocurrencies values; and
4. Failing to register with the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (“FinCen”) and the U.S. Commodity Futures Trading Commission (“CFTC”).

Upon pleading guilty to one count of operating an unlicensed money transmitting business, the Exchange agreed to forfeit $184.5 million and pay a $112.9 million fine, totaling $297 million. However, this amount will be offset by a forthcoming settlement with the CFTC and a related settlement in a New York civil action. 

The DOJ also granted the Exchange’s a 25% reduction in its fine due to its cooperation following the Indictment and recognized the significant remedial measures undertaken by the Exchange before and after the Indictment regarding its compliance program, including (i) engagement with a third party to conduct certain screening and to review KYC verification; (ii) updating KYC policies to require KYC for all customers and to prohibit U.S. customers from passing the KYC process; (iii) identifying and offboarding U.S. users; and (iv) other compliance enhancements.

In addition to the monetary fines, the Exchange agreed to (i) exit the U.S. market for at least two years; (ii) remove the two founders who were similarly indicted; and (iii) retain an external compliance consultant to conduct two annual reviews, ensuring that the Exchange left the U.S. market.

This resolution occurs in the shadow of an expected regulatory shakeup, following the January 20, 2025 presidential transition. Just three days after taking office, President Trump issued an executive order establishing a working group tasked with reviewing and recommending a new federal framework for digital asset regulation. It remains to be seen how the regulatory landscape and enforcement environment for digital assets will evolve, and what that change will mean for those active in the digital asset space.