The news of Sam Altman getting fired from OpenAI wasn’t a good enough “step-down-as-a-hero” story. Some hours ago, breaking news sent the entire crypto market into endless speculation. Founder and CEO of the largest crypto exchange, Binance, stepped down from his role and it’s not because he needed a gap year on his CV.
Changpeng Zhao (popularly called CZ), a well-respected thought leader in the crypto space and someone consistent in reminding Binance users that their funds are SAFU, reportedly stepped down from his executive role as CEO of the exchange. The step-down was part of the agreement between the exchange and the Department Of Justice (DOJ).
How it all started
The Department of Justice, Commodity Futures Trading Commission (CFTC), and other authorities have been looking into allegations of anti-money laundering and sanction issues for years and Binance happened to be on its radar.
The investigation has been ongoing for a while now for the following allegations:
Diverting users’ funds.
Operating as an unregistered securities exchange violates a section of the U.S. securities laws.
Processing transactions by illegal actors and these transactions supported several criminal activities like illegal narcotics, child sexual abuse, terrorism (Hamas group for instance), etc.
US Attorney General, Merrick Garland, insisted that Binance attained its height as the world’s largest crypto exchange due to the hidden crimes committed within the exchange which CZ intentionally turned a blind eye to make a profit.
The now-former CEO pleaded guilty to his inability to prevent money laundering on his exchange by violating anti-money laundering requirements and has taken full responsibility.
“I made mistakes and I must take responsibility. This is best for our community, Binance, and myself,” he tweeted on X a few hours after the news got out. Better to stand down and see your company survive, than fight and see your sweat go down the drain, right?
Agreement between Binance and the DOJ:
Binance will be subjected to five years of close monitoring by the Treasury Department.
Changpeng Zhao’s exit as Binance’s CEO.
Roughly $4 billion penalty settlement. The US Attorney General acknowledged that this is one of the biggest penalties that has ever been obtained from a corporate defendant in a criminal suit.
CZ gets to retain his stakeholder position in the company.
What Next
CZ’s sentencing has been set for February 23, 2024, but he is unlikely to face jail time as a result of his plea deal.
It isn’t over for the exchange…at least not yet. A new CEO has already been appointed as of yesterday. Binance’s now former Global Head of Regional Markets, Richard Teng has been named new CEO of Binance. He assumed his role immediately and was to ensure the exchange continued its activities as usual. “With Richard and the entire team, I’m confident that the best days for Binance and the crypto industry lay ahead,” Zhao stated. He also mentioned that he would remain available to the team to consult.
Outlining his next steps, CZ pointed out that he’ll take a much-needed break, after which he might be a passive investor in startups within the blockchain/DeFI/AI/biotech ecosystem. He also stated that he can’t see himself being CEO of a startup again but may be open to privately coaching and mentoring a few upcoming entrepreneurs.
In the concluding part of what seems to be his last tweet as Binance’s CEO, he once again reassured users that their funds are SAFU.
Richard Teng, accepting his promotion, tweeted “It is an honour and with the deepest humility that I step into the role of Binance’s new CEO.”
Market Impact:
Unexpectedly, the news has had no significant setback on the market. The $4 billion fine, as reported, won’t cause a huge dent in Binance's reserve as it’s capable of continuing operation smoothly afterwards.
Community Reaction:
As expected, news like this gave rise to a community belonging to two different schools of thought.
School of Thought #1:
Crypto users are in constant admiration of the former CEO and believe that Binance is far from collapsing.
School of Thought #2
Crypto users must have learned their lessons the “FTX way” and are not taking chances. There has been a decline in BNB and other smaller cryptocurrencies since the news made headlines but there hasn’t been any real impact.
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