Binance, the world's largest cryptocurrency exchange, will pay one of the largest corporate penalties in U.S. history as a coalition of federal regulators accused the company of violating laws in pursuit of growing market share.

The company will also pay $4.3 billion toward the settlement and founder Changpeng Zhao, better known as CZ, has agreed to step down and plead guilty to felony criminal charges of money laundering levied by the U.S. Department of Justice.

Wait, So What Happened With Binance?

The Department of Justice has alleged Zhao violated the Bank Secrecy Act by failing to implement an effective anti-money laundering program at Binance, according to a court filing from last week unsealed Tuesday.

Prior to August 2021, Binance allowed many users to trade on its platform without proper Know Your Customer (KYC) systems, the complaint alleges, as Zhao believed "requiring all customers to provide KYC information would mean that some customers would choose not to use Binance and others would be rejected by the compliance process—both of which would interfere with Binance gaining market share." Not having these rules in place also allowed U.S. users to transact with sanctioned users and criminal enterprises. Treasury Secretary Janet Yellen said the company processed transactions linked with child sexual abuse, illegal narcotics and terrorism across more than 100,000 transactions without reporting suspicious activity. "The message here should be clear, using new technology to break the law does not make you a disrupter. It makes you a criminal," said U.S. Attorney General Merrick Garland said in a press conference Tuesday.

Not Binance's First Regulatory Rodeo

Binance came under the regulatory scanner in the U.S. as early as 2018, with the Justice Department investigating possible money laundering rule violations. In response, Binance shuttered services for American customers directly and licensed its name instead to BAM Trading to set up Binance.US.

Among multiple regulatory tangles, Binance and Zhao were also sued by the U.S. Securities and Exchange Commission earlier this year for operating an unlicensed securities exchange. The SEC has also gone after other crypto exchanges such as Coinbase (COIN), Bittrex and most recently Kraken with the same allegations.

What Does This Mean For Binance and Crypto Investors?

Binance will be required to report the suspicious transactions it processed and subjected to increased scrutiny for five years through a third-party monitor. On Tuesday afternoon, Zhao tweeted the company's Global Head of Regional Markets Richard Teng will immediately take over as CEO.

From the broader cryptocurrency market perspective, CFTC Chairman Rostin Behnam once again renewed his call for more restrictions on digital assets.

"We've seen gaps in the current regulatory structure around digital assets," he said in response to a reporter's question. "I've advocated for filling in some of these gaps, specifically around commodity tokens. And I do think if we're able to do that—obviously with Congress's help—we can prevent these actions from happening and not have to be here after the fact."

The charges against Binance could be a tailwind for competitor Coinbase, according to VanEck Head of Digital Asset Research Matt Sigel told Bloomberg that Coinbase stands to benefit.

"I think it's a continuation of the trend we've seen this year, which is Coinbase picking up market share because they are the closest thing to a regulated entity inside the U.S., given their custody solution," Sigel told Bloomberg. "And that's despite the fact that the SEC has sued Coinbase as well for selling unregistered securities."

Meanwhile, crypto markets felt the aftershocks of today's enforcement action. Binance coin (BNBUSD) , Binance's native token, was down roughly 4% while bitcoin (BTCUSD), and Ether (ETHUSD) fell 1.4% and 1.2% respectively.

Nov. 21 Update: This article has been updated to include new information from federal regulators and Zhao.