The cryptocurrency landscape is undergoing a seismic shift as Binance, once the world’s largest cryptocurrency exchange, and its CEO, Changpeng Zhao (CZ), recently pleaded guilty to criminal activity. This development marks a crucial moment for the cryptocurrency industry, signaling potential growth as regulatory authorities crack down on major players engaging in unlawful conduct.
While digital assets and blockchain technology have promised revolutionary advancements, the early years of the cryptocurrency industry were marred by allegations of financial rule violations. Binance and FTX founder Sam Bankman-Fried are among those proven to have engaged in criminal activities, overshadowing the potential of the digital asset class.
The recent events surrounding the collapse of FTX and the legal troubles faced by Binance could be the catalyst for a new era in the digital asset space. With the removal of actors seeking to circumvent or disregard laws, legitimate businesses now have the opportunity to thrive, potentially marking the true beginning of the digital asset class.
As part of the plea arrangement, Binance agreed to pay a historic $4.3 billion penalty to the US Treasury and FinCEN. Additionally, Changpeng Zhao stepped down as CEO and faces fines and a potential prison sentence of up to ten years. Binance will continue operations but under stringent conditions outlined in the settlement agreement with the Financial Crimes Enforcement Network (FinCEN).
The settlement imposes a complete exit from the United States for Binance and a five-year monitorship. The monitorship grants the U.S. Treasury Department access to Binance’s books, records, and systems, providing reports to FinCEN, the Office of Foreign Assets Control (OFAC), the Commodity Futures Trading Commission (CFTC), and the Department of Justice. Notably, the Securities and Exchange Commission (SEC) is not part of the settlement, and Binance still needs to address SEC concerns.
The monitorship includes increased scrutiny of the top 35 customers by revenue, both immediately and annually throughout its term. Binance is required to review all transactions from 2018 to the end of 2022, filing all Suspicious Activity Reports that should have been submitted during that period.
Binance’s criminal conduct involved serious violations, including failure to prevent and report suspicious transactions related to terrorist organizations, ransomware attackers, money launderers, and other criminals. The DOJ press release emphasized Binance’s willful failure to report over 100,000 suspicious transactions, enabling illicit actors to transact freely on the platform.
The cryptocurrency market has responded positively to these developments, with Bitcoin rallying to over $38,000 on Friday morning. The guilty plea from Binance has sparked optimism for the future of the digital asset class, indicating a potential new beginning free from bad actors and rigged practices.
