Binance Crushed by Fedds
Why we are saying Binance Crushed by Fedds?
Just one month after FTX founder Sam Bankman-Fried was found guilty of fraud, Changpeng “CZ” Zhao, the founder and CEO of Binance, who was Zhao’s main opponent, entered a guilty plea on Tuesday for breaking federal anti-money laundering laws and “failure to register as a money transmitting business.” In addition to paying a fine of $150 million, he will receive a sentence for the criminal allegations. The Wall Street Journal broke the story first. In order to resolve civil lawsuits filed by the US Department of Justice and the Department of Treasury, Binance itself also consented to enter a guilty plea and pay fines totaling $4.3 billion.
Attorney General Merrick Garland stated, “Using new technology to break the law does not make you a disruptor; it makes you a criminal.” He went on to say that terrorists, money launderers, and drug dealers operating in sanctioned areas like Iran and occupied Ukraine now prefer to trade on Binance. The business acknowledged that it had concealed its dealings with valuable American clients.
Zhao, who founded the company in 2017, will step down as CEO but keep financial control over it. The purpose of the agreement is to keep Binance running. The company claims to have an average daily volume of $65 billion, making it the largest cyber trading outfit in the world. A three-year monitoring program was also agreed to.
It’s a crushing victory over the biggest names in cryptocurrency for the DOJ and, by extension, Securities and Exchange Commission chairman Gary Gensler. It also puts an end, at least temporarily, to the idea that international crypto operations are outside the purview of US regulators. In June, the SEC filed a lawsuit against Binance for running unregistered exchanges and breaking its own policies to benefit high-value American clients.
Additionally, earlier this week, the SEC claimed that Kraken, a cryptocurrency exchange based in San Francisco, had broken securities laws by serving as an exchange, clearing agency, broker, dealer, and broker “without adhering to or even recognizing the requirements of the U.S. securities laws.” That is essentially what cryptocurrency exchanges operating outside of the United States do. Furthermore, San Francisco-based Coinbase was accused by the SEC in June of “operating its crypto asset trading platform as an unregistered national securities exchange, broker, and clearing agency.”
Have any people been missed by them?
While Binance was evading US regulations, Zhao traveled the world as a cryptocurrency evangelist, using his social media platforms to pressure authorities into establishing reasonable and consistent regulations surrounding cryptocurrencies and pledging to abide by them.
His criticism of US regulators, particularly the SEC, was not unique. Critics of Gensler, ranging from the U.S. Senate to The Wall Street Journal, have attacked him for what the Journal’s editorial board dubbed his “cryptomarket power grab” over matters like refusing to approve a spot bitcoin exchange-traded product. However, it is evident that federal agencies are winning out in their demands that cryptocurrency companies follow the law and regulations, which are supported by court rulings.
Remember that when some questions regarding FTX’s balance sheet surfaced, it was CZ who threw SBF under the bus? Binance was actively evaluating an acquisition of FTX at the time. Zhang sold Binance’s FTT holdings after realizing that the FTT tokens—basically, the currency of no fixed value issued by FTX—were risky and supported FTX’s balance sheet. Then, the price of FTX and FTT both plummeted. BlockFi, the exchange that was Inc.’s fastest-growing business in 2021 until it encountered difficulties during the cryptocurrency winter of that year, is also holding FTT. BlockFi believed that FTX and the valiant SBF had saved it, but CZ discovered that SBF had been brutally exposed to receive a bailout from Binance during his criminal trial.
Now that the largest cryptocurrency company in the world has given in to the US government, it’s CZ’s turn in the dock. Lisa O. Monaco, the deputy attorney general, pointed out that “a corporate strategy that puts profits over compliance isn’t a path to riches.” “It’s a path to federal prosecution.”
Despite the legal troubles, CZ remains one of the richest and most influential figures in the crypto industry, with an estimated net worth of $9.2 billion, according to Forbes. He is not alone in his prominence, however. Other notable crypto leaders include Vitalik Buterin, the co-founder of Ethereum, the second-largest cryptocurrency by market cap and the most widely used platform for dApps and smart contracts; Brian Armstrong, the co-founder and CEO of Coinbase, the largest US-based crypto exchange and the first to go public on Nasdaq; Sam Bankman-Fried, the founder and CEO of FTX, a fast-growing crypto derivatives exchange that has made headlines for its aggressive marketing and philanthropy; and Michael Saylor, the CEO of MicroStrategy, a business intelligence firm that has invested billions of dollars in Bitcoin and become a vocal advocate for the leading cryptocurrency.
CZ’s guilty plea may mark a turning point for Binance and the crypto industry as a whole, as regulators and policymakers seek to impose more oversight and accountability on the fast-growing and volatile sector. It remains to be seen how CZ’s cooperation will affect Binance’s operations and reputation, and whether he will be able to retain his leadership position and influence in the crypto space.
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