Binance CEO controversy confirmed

Several unfavorable stories about Changpeng CZ Zhao, the CEO and co-founder of Binance, the largest cryptocurrency exchange in the world, surfaced yesterday.

The sources were reliable enough that few people ventured to dispute them, even if they were still merely unverified reports.

But today we also have formal confirmations, with interesting remarks from Binance and CZ himself in particular.

Quotes from CZ, the former CEO of Binance, a cryptocurrency exchange

CZ stated in his letter that he had to accept responsibility for his faults and that’s why he was quitting as CEO.

He omitted to mention that the decision was likely imposed on him by the Department of Justice deal, which effectively barred him from holding operational positions with Binance.

It also turned out that he was required to deposit a $175 million bail before the authorities would have freed him; else, he would have been imprisoned.

Additionally, it was discovered that he was granted permission to go live in the United Arab Emirates, possibly in Dubai, while he awaited his court appearance on February 23, 2024. He might spend up to eighteen months behind bars.

The truth is that he entered a guilty plea to the charge of violating anti-money laundering laws, to the extent that it is believed that terrorist groups like Hamas also used Binance’s cryptocurrency exchange to generate money covertly.

Additionally, CZ has said that he will only be a passive investor going forward and that he no longer wants to be the CEO of any firm.

The recently appointed CEO

Additionally, CZ revealed that Richard Teng, the company’s current Global Head of Regional Markets, will take over as CEO of Binance.

Teng has also held positions as Director of Regulation at the Singapore Stock Exchange (SGX), Director of Corporate Finance at the Monetary Authority of Singapore, and CEO of the Financial Services Regulatory Authority at the Abu Dhabi Global Market (ADGM).

This is a significant development for the cryptocurrency exchange. In fact, regulatory issues have never received much attention from it until now; however, with Teng, this could change.

However, Binance’s continued existence now rests on it, as the exchange runs the risk of closing if more issues of this nature arise.

Even though Binance appears to have reached a resolution to its issues with the American legal system, similar issues may still exist in other regions of the world (like as Europe) and have not yet been resolved.

CZ and cryptocurrency exchange Binance’s declarations

Binance fully disclosed the terms of the settlement with the US Department of Justice in a post on its official blog.

The agreement at least permits the corporation to go forward, even though the long document acknowledges its culpability for past and criminal compliance infractions.

They jot down:

“With the compliance and governance enhancements enshrined in our commitments, we can begin to share our vision for Binance’s exciting future and the future of the crypto industry. We are confident that Binance will emerge as a stronger company as we lay the foundation for the next 50 years.”

They make it clear that neither the misappropriation of user cash by Binance nor any involvement in market manipulation by the company have been discovered by US authorities.

These declarations serve to reaffirm that the Binance situation is quite distinct from that of, say, FTX and other cryptocurrency companies that filed for bankruptcy due to inadequate fund security.

However, it looks that users have taken out more than $1 billion of their own money from the exchange since yesterday.

Declarations from US officials

The remarks made by American authorities had a very different tone.

The Justice Department staged a triumphant press conference.

Attorney General Merrick B. Garland went so far as to say that Binance’s rise to prominence as the largest cryptocurrency exchange globally was partly due to the fact that the exchange had committed the same offenses that it admitted to doing.

Garland said:

“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.”

The remarks made by Treasury Secretary Janet Yellen were also noteworthy.

Despite her long history of harsh criticism of the cryptocurrency industry, she was more optimistic this time around, writing that cryptocurrency exchanges only need to follow the regulations in order to be allowed to operate within the U.S. financial system.

She used to seem to want to just stop people from doing it, but now she expressly says that they can as long as they follow the guidelines, which are essentially the same for everyone.

Statements from the Treasury Department also lean that way.

They state:

“Wherever located, virtual currency exchanges and financial technology firms should, like any other financial institution, ensure they adopt a managerial commitment to compliance at the very top, and that risk-based programs and controls are integrated effectively into their platforms and technology from “Day One”.”

The breakthrough

This has the aroma of a true innovation.

Not just about Binance, of course, but also about how the United States views the cryptocurrency market.

Here, in response to the “case of cases,” the US authorities only demand that the laws be followed, thereby tacitly acknowledging that the cryptocurrency industry can continue to function unhindered even within the US as long as it can adhere to the same regulations that everyone else does.

The crypto business is developing quite a bit, as evidenced by the impending entry of corporations like BlackRock, which have been operating in complete accordance with rules for quite some time.

It’s more likely just an ordinary extension of the world banking system now, rather than the Wild West.