Binance Transferred $3.9B In Tether From Cold Wallet Prior To Settlement With DoJ

Binance and Changpeng Zhao (CZ) struck a settlement deal with the U.S. government in a bid to continue the crypto exchange's operation and end the years-long investigations by several agencies and regulators into the firm and its executives. However, days before the historic settlement with the U.S. Department of Justice, Binance transferred $3.9 billion in Tether between its wallets, raising suspicions in the cryptocurrency industry.

Binance and its CEO Zhao pleading guilty to the allegations by the U.S. government helps explain why the exchange has been moving billions worth of stablecoins in the weeks leading to the finalization of the settlement with the U.S. government.

The $3.9 billion USDT transaction, which was completed on Nov. 9, is within the range of the $4.3 billion that Binance is required to pay as part of the settlement agreement.

The funds were moved from the Binance cold wallet (Binance-Cold 2) into Binance 3, another wallet of the exchange.

On-chain data revealed that the Binance 3 wallet currently holds around $6.6 billion in funds, with $4 billion in USDT and the rest in different stablecoins like Decentraland USD (USDD) and TrueUSD (TUSD).

So far, it is unclear if Binance reserves the funds in that particular wallet for its payment to the settlement agreement or if it intends to use the funds for other matters.

In the past, Binance mentioned that its cold wallets held the bulk of the company's funds.

Earlier this week, it was reported that Binance is in discussion with the U.S. Justice Department for a potential settlement that includes over $4 billion in fines.

In a federal court in Seattle on Tuesday, Zhao pleaded guilty to violating the Bank Secrecy Act and anti-money laundering and U.S. sanctions violations.

As part of the settlement deal, Zhao had to resign from his post as the CEO of Binance, which he confirmed in a post on X on the same day. He also introduced Richard Teng as his replacement.

"Today, I stepped down as CEO of Binance. Admittedly, it was not easy to let go emotionally. But I know it is the right thing to do. I made mistakes, and I must take responsibility. This is best for our community, for Binance, and for myself," Zhao said.

As part of the settlement agreement, Binance needs to pay a $4.3 billion fine, while Zhao is required to pay a $50 million fine.

The settlement agreement included the Justice Department, Treasury Department and Commodity Futures Trading Commission (CFTC), bringing an end to their years-long investigation of the exchange.