The Chief Executive of Binance has stepped down after pleading guilty to anti-money laundering violations in the US, marking the second crypto king to be toppled by US prosecutors in less than a month.

Changpeng Zhao, known in the industry as “CZ”, pleaded guilty to failing to maintain an effective anti-money laundering programme in a Seattle federal court on Tuesday.

He has also agreed to pay a $50m (£39.9m) fine and step down from Binance under a broader deal to settle multiple investigations into the cryptocurrency exchange. The company has agreed to pay the US $4bn to end multiple federal investigations.

It marks a stunning fall for one of the last figureheads of the cryptocurrency industry.

Mr Zhao becomes the second crypto entrepreneur to see his business career end in US courts this month following the conviction of former FTX chief Sam Bankman-Fried on multiple counts of fraud earlier this month.

Mr Zhao was a rival of Mr Bankman-Fried and was instrumental in the collapse of FTX. A tweet he sent saying Binance was selling a token issued by FTX triggered concerns about the exchange’s finances and ultimately led to the company’s unravelling last year.

Merrick B. Garland, the US Attorney General, said in a statement: “In just the past month, the Justice Department has successfully prosecuted the CEOs of two of the world’s largest cryptocurrency exchanges in two separate criminal cases. 

“The message here should be clear: using new technology to break the law does not make you a disruptor, it makes you a criminal.”

Binance’s deal draws to a close a string of legal battles between the company and US officials. These include a lawsuit from US regulator the Commodity Futures Trading Commission, which in April accused Binance of failing to conduct basic compliance to stop potential terror financing and money laundering, including suspected transactions with Hamas.

Treasury Secretary Janet Yellen said: “Binance turned a blind eye to its legal obligations in the pursuit of profit. Its willful failures allowed money to flow to terrorists, cybercriminals, and child abusers through its platform.”

The US Treasury said Binance allowed Hamas’ military wing al-Qassam Brigades, Palestinian Islamic Jihad, al-Qaeda and other criminals to conduct transactions.

Mr Garland said: “Binance became the world’s largest cryptocurrency exchange in part because of the crimes it committed – now it is paying one of the largest corporate penalties in US history.”

Officials said Binance had earned around $1.35bn in fees from US customers.

Mr Zhao said in a statement posted on Twitter: “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.”

In a blog post, the company blamed its past failures on the fact it “grew at an extremely fast pace globally, in a new and evolving industry that was in the early stages of regulation.” It admitted to making “misguided decisions along the way.”

Founded in 2017, Binance, which is based offshore, grew rapidly but has been dogged by controversy. It has been the subject of official warnings from the UK’s Financial Conduct Authority (FCA), which has blocked it from launching in the UK and warned it poses “significant risk” to consumers.

Lord Ed Vaizey, the former digital and culture minister, joined Binance’s advisory board last year to provide advice on how the company could “satisfy the regulator’s issues”.

In October, Binance was forced to stop signing up new UK customers after the FCA cancelled approvals for a partner company it was working with.

Richard Teng, Binance’s former global head of regional markets, has been named the company’s new chief executive.

Digital coins have long faced criticism that they can be used by criminals to avoid detection, while consumers have been conned out of hundreds of millions of pounds by cryptocurrency scams.

The cryptocurrency industry has faced mounting scrutiny after the collapse of FTX. At one stage valued at $32bn, the world’s second biggest exchange filed for bankruptcy last year and its founder, Sam Bankman-Fried, was found guilty of fraud in the US after he was accused of misusing customer funds. He will be sentenced next year.

The price of the digital currency of Bitcoin fell by 2pc on Tuesday and was trading at around £29,350.

Lord Vaizey was approached for comment.

More details as it unfolds........