Binance, the world’s largest cryptocurrency exchange, is widely reported to have agreed a massive $4bn (£3.2bn) legal settlement with US authorities that will force out its founder and chief executive.

It emerged on Tuesday evening that Changpeng Zhao had admitted, at a federal court in Seattle, a charge of failing to take steps to prevent money laundering at the company he set up in 2017.

Sentencing is expected next year.

More details of the wider case were expected to emerge later in the day.

But the AP news agency, citing a person familiar with the apparent plea bargain, said that the $4bn settlement related to alleged similar practices to those uncovered after the collapse of rival FTX last year.

The FTX founder, Sam Bankman-Fried, was convicted earlier this month of seven charges – essentially the theft of at least $10bn from customers and investors.

He faces the prospect of spending the rest of his life behind bars.

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The case against Binance threatens to pour more fuel on the fire engulfing the crypto sector, which has responded to the legal crackdown against the sector by pleading for action to create a global regulatory framework.

Zhao had previously faced claims from US regulators of diverting billions of dollars in customer funds to another company he also owned.

In the summer, the Securities and Exchange Commission (SEC) revealed a string of 13 charges including the operation of an unregistered exchange.

Binance responded at the time by saying it would “defend our platform vigorously”.

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