![]() To understand, it’s worth getting into the structure of Binance itself, a limited liability company that Chinese-Canadian businessman Changpeng Zhao registered in the Cayman Islands on July 2017, that quickly became the world’s largest crypto exchange by volume, and that granted CZ staggering wealth. The SEC complaint takes aim at four separate entities, though it later shows how all of them are interconnected in bizarre ways. Specifically, he’d cast public doubts on the legitimacy of FTX’s finances and backed out of a deal to purchase that crypto exchange after it took a market hit from other damning exposés. You may recall that FTX and Alameda Research-the once-ascendant crypto firms launched by disgraced crypto mogul Sam Bankman-Fried-unraveled in November thanks in large part to Changpeng “CZ” Zhao and his public bearishness on those companies. Not only because they portend a showdown in federal court against the world’s largest crypto exchange-but because of what they portend for the future of crypto regulation, and because they make a strong case that Binance wasn’t so different from the industry competitors it previousy condemned as crooks and scammers. Still, the new SEC charges are a big, big deal. ![]() Binance has faced international lawsuits and probes many times before, and in March, the supposedly more crypto-friendly Commodities and Futures Trading Commission filed a civil lawsuit against it for allegedly flouting market-manipulation and money-laundering laws. securities markets without being properly registered, and, on top of all that, engaging in securities fraud. ![]() On Monday, the SEC filed more than a dozen charges against the international crypto exchange Binance, its United States–based affiliate Binance.US, the parent company of Binance.US, and controversial Binance CEO Changpeng Zhao-accusing the mercurial entrepreneur and his enterprises of misleading investors, operating in the U.S. This has made the regulatory agency a keen enemy of Bitcoin purists, crypto truthers, and dudes really into pixelated art-and now it has made its biggest crackdown yet. The New York Fed finished a monthslong test involving blockchain and big banks and concluded that tokenized deposits could improve domestic and cross-border money transfers.The Securities and Exchange Commission has not pulled its punches against the volatile, scam-ridden cryptocurrency economy over the past two years, tackling everyone from big-name corporations and executives to celebrity investors while seeking to create new regulations in the free-for-all space. The FBI searched the home of Kraken founder Jesse Powell as part of an investigation into the alleged hacking and cyber-stalking of a nonprofit arts group founded by Powell. crypto job listings have dropped off, including in cities like Las Vegas and Dallas, by as much as 80%. A year from now, Zhao may wish he had made a deal. And if the Treasury Department decides to label the company as a sanctions violator-a radioactive status as far as banks are concerned-then look out. allies, including Australia and the Netherlands, have already moved to cut Binance off from the banking system. government has become incredibly effective at flexing its financial might around the globe. The trouble with this is that, for better or worse, the U.S. He has also framed the situation as a problem in the U.S.-not for the company more broadly, which appears to be doing fine financially. Zhao has put a brave face on the departures of the company’s senior legal and compliance staff, suggesting it is just more FUD (fear, uncertainty, and doubt) by the bumbling media. But what is clear is that Binance will now be fighting for its life. And that Zhao then changed his mind and decided he would take his chances rather than be forced to step away from an empire he built from the ground up.Īs of today, we just don’t know for sure. Reading between the lines, it’s not hard to imagine that the deal between the Justice Department and Binance called for Zhao to step aside as a condition of the settlement. You may recall that Bloomberg published a lengthy profile of Zhao’s “heir apparent,” a veteran executive who was well suited to deal with regulatory headwinds. ![]() It’s also possible that it was Binance, and its hardheaded CEO in particular, that tanked the settlement. ![]()
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