On Tuesday evening, Changpeng Zhao (CZ) stepped down as CEO of cryptocurrency exchange Binance. The decision came as part of a massive $4 billion settlement between Binance and some US agencies. The settlement came at the end of a long investigation by the US Department of Justice that was tasked with examining money laundering and compliance control violations within the exchange. In a press statement, the exchange admitted that “When Binance first launched, it did not have compliance controls adequate for the company that it was quickly becoming, and it should have.”
CZ appeared in federal court on Tuesday to plead guilty to these charges, and Binance has been hit with a multi-billion dollar fine as a result. The allegations brought forth by the Treasury Department included Binance’s failure to report “suspicious transactions with terrorists”. Binance as a result will need to pay $3.4 billion to FinCEN, the Financial Crimes Enforcement Network that is part of the Treasury Department.
But what are the tangible repercussions for Binance with this settlement, other than the ousting of its CEO? The exchange saw almost $1 billion in net outflows in the 24 hours after the settlement was announced. According to a CoinDesk article, “over $2.37 billion in various tokens left the exchange, but $1.78 billion were deposited.” In addition, Treasury Secretary Janet Yellen also confirmed that the settlement included Binance making a complete exit from the US.
Binance reacted quickly to the settlement: while CZ will stay on as majority shareholder, it promoted Richard Teng as CEO. Teng was previously the director of corporate finance at the Monetary Authority of Singapore, and joined Binance in 2021. Teng will have a difficult job ahead, as he will need to revamp Binance’s image. He will also need to make sure Binance’s native token, BNB, returns to its previous highs. In fact, BNB went down 15% after Zhao’s resignation, understandably enough. He will also need to ensure compliance with regulators and ensure that such an investigation does not occur again. As Changpeng Zhao steps down, a new era begins for Binance: how it will evolve, only time will tell.
