Cryptocurrencies fell Tuesday after Binance founder and CEO Changpeng Zhao, also known as "CZ," pleaded guilty to criminal charges brought by the U.S. Department of Justice.
Binance Coin slid 5.9%, after rising as much as 5% earlier in the day with hopeful investors eager to see the multiyear investigation into the largest cryptocurrency exchange in the world resolved.
The move weighed on the rest of the crypto market. Ripple's XRP fell 3.2%, Solana was down by more than 4%. Polygon and Uniswap lost 7.8% and 3.8%, respectively. Meanwhile, bitcoin was down by 1.53%, hovering just below $37,000. Ether was last lower by about 2.1% at $1,992.43.
"Markets are whipsawing with each new piece of information, but will start to settle as we head into the U.S. holiday," said Michael Safai, cofounder and partner at Dexterity Capital. "Remember, most traders haven't operated in a market where there is no CZ. Any upside from the settlement may be met with some temporary selling pressure as the market considers how Binance moves forward. But crypto veterans have seen this play out before."
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"It's hard to see Binance losing its dominance, but this will certainly create room for newer players to fill any void," he added.
Under the agreement, Zhao will pay a $50 million fine and step down as chief executive.
In a separate action, Binance agreed to plead guilty to violations of the Bank Secrecy Act, knowingly failing to register as a money transmitting business and violating the International Emergency Economic Powers Act. The company is required by the DOJ to pay $4.3 billion in penalties and forfeitures.
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The actions against Binance and its founder were a joint effort by the DOJ, the Commodity Futures Trading Commission and the Treasury Department. The Securities and Exchange Commission was noticeably absent.
Elsewhere, investors were also weighing news from another major crypto exchange: Kraken. On Monday evening, the SEC alleged that the company has been operating as an unregistered broker, clearing agency and dealer and that it commingled customers' crypto assets with its own.
This is the second time this year that the SEC has sued Kraken. In February, the agency said Kraken failed to register the offer and sale of its crypto asset staking-as-a-service program.
Meanwhile, the DOJ on Tuesday commended Tether, the controversial operator of the biggest stablecoin in the crypto ecosystem, for its efforts in freezing $225 million of assets linked to a human trafficking syndicate in Southeast Asia.
—CNBC's Mackenzie Sigalos and Ryan Browne contributed reporting.
