The dream is shattered, but the result is still not bad

The most powerful “king” in the cryptocurrency field Changpeng Zhao – also known as CZ – has lost his crown, and the Binance empire he founded in 2017 has just undergone a shakeup.

Binance is not only the world's largest cryptocurrency exchange, but it is also in a position that its competitors have had difficulty challenging. Until recently, Binance had a market share of nearly 60% in the spot cryptocurrency trading market.

Even though that rate has dropped to nearly 40% since US regulators stepped up pressure on the company starting in June of this year, no other exchange in the space can match it.

By comparison, OKX, based in Seychelles, an island nation in the Indian Ocean, ranked second in market share with 5.44%, and U.S.-based Coinbase ranked third with 5.37%, according to cryptocurrency news site CoinDesk.

But Binance's future as the world's leading cryptocurrency exchange is now uncertain, and so is that of its founder as it faces a record $4.3 billion settlement with U.S. regulators to settle criminal charges.

On November 21, Mr. Zhao resigned as CEO of Binance and pleaded guilty to money laundering charges. US officials called it the largest corporate settlement ever involving criminal charges against an executive.

Dreams Shattered

After launching Binance in Shanghai in 2017, Chinese-Canadian entrepreneur Changpeng Zhao had a big dream. “We want to take over the whole market!” Zhao told employees in an internal company chat group that year.

The 46-year-old CEO has never wavered in his belief in building the world’s largest cryptocurrency exchange. Even this year, Mr. Zhao still feels a big goal is within reach.

“The idea that a five-year-old startup can mature and operate at the same level as a 200-year-old financial institution is unfathomable,” Zhao said in his 2022 review published in January 2023. “But today we are almost there.”

In that review, Binance praised its progress in complying with regulations around the world. The exchange has worked throughout the year to increase customer checks and develop “the best security and compliance team” in crypto.

Binance launched in June 2017 and within 180 days became the world's largest cryptocurrency exchange. Photo: Amb Crypto

But Mr. Zhao and Binance's goals were dashed after they pleaded guilty and agreed to pay a fine on November 21.

“By failing to comply with U.S. law, Binance has made it easier for criminals to move stolen funds and other illicit proceeds on its exchanges,” U.S. Attorney General Merrick Garland said on November 21. “Binance is not simply failing to comply with federal law.”

After a years-long investigation, US authorities said Binance allowed bad actors to participate in the platform, enabling transactions related to child sexual abuse, drugs and terrorist financing.

Furthermore, according to the US Department of Justice , Binance has no protocol for flagging or reporting transactions that pose money laundering risks, and the company's employees were well aware that such monitoring would "invite" criminals to the platform.

The maximum sentence in this case is 10 years in prison. But the U.S. Sentencing Commission has set a prison term of 10 to 18 months for the charges Mr. Zhao faces. Prosecutors are asking for 18 months in prison, The New York Times reported. Mr. Zhao also agreed to pay a criminal fine of $50 million and a civil penalty of $150 million.

“I made a mistake and I have to take responsibility,” Zhao said on X/Twitter. “This is what is best for our community, for Binance, and for myself. Binance is no longer a child. It is time for me to let it go and run.”

Best results

The case of Binance, like its notorious former rival FTX, shows that they have grown their business rapidly in a chaotic and largely unregulated industry.

“While Binance is not perfect, it has strived to protect its users since its early days as a small startup and has made tremendous efforts to invest in security and compliance,” Binance said in a statement on Nov. 21.

“Binance grew at an incredibly fast pace globally… and made some bad decisions along the way. Today, Binance takes responsibility for the past chapter. Binance believes that the crypto industry and Binance still have a bright future.”

Analysts see the settlement as a partial victory for Binance and Mr. Zhao.

Binance's continued operations help the market escape the risk of a sell-off. Photo: Fortune

“A reduced prison term for Mr. Zhao and the ability for the exchange to continue operating, albeit without Mr. Zhao as CEO, may be the best outcome given the severity of the allegations against Binance,” said Robert Le, a crypto analyst at PitchBook.

“Binance’s initial ‘move fast and break things’ approach, which involved offering illegal products or entering the market without proper licensing, has led to the current predicament,” the expert said.

The initial market reaction to the Binance news was relatively muted compared to the notorious volatility of the cryptocurrency market.

As of 3:30 p.m. on November 21, US time (3:30 a.m. on November 22, Vietnam time), Bitcoin price decreased by 1.5% to $37,016 while Ethereum price decreased by 2.5% to $1,987 compared to 24 hours earlier.

Binance Coin, the exchange’s native token, fell 6.3% to $242, according to CoinDesk data. Crypto stocks also fell. Coinbase Global, the largest U.S. cryptocurrency exchange, fell 0.7%. Shares of leading bitcoin mining companies Marathon Digital and Riot Platforms fell 3.2% and 1.6%, respectively.

The market reaction reflects expectations that a $4.3 billion settlement is within reach for Binance, Reuters reported, citing four cryptocurrency investors and traders. Such a settlement would allow Binance to continue operating, avoiding a market sell-off triggered by any turmoil, Reuters sources said .

Minh Duc (According to CNN, Reuters, WSJ)

Source: https://www.nguoiduatin.vn/san-tien-dien-tu-binance-giac-mo-tieu-tan-nhung-ket-qua-van-khong-te-a637122.html