By Arun Kumar Shrivastav Crypto exchange Binance’s co-founder and CEO Changpeng Zhao resigned on November 22 after the federal judges found his company guilty of violating U.S. anti-money laundering and sanction laws. The world’s largest crypto exchange was charged with not reporting over 100,000 suspicious transactions involving terror organizations, including Hamas, al Qaeda, Islamic State of Iraq and Syria. Changpeng Zhao, who is popularly known as C.Z. and has been practically the face of the cryptocurrency industry over the past five years, has agreed to a whopping $4 billion in fines. Given the company’s financial strength, it can take this setback in its stride and move on. On several occasions when users rushed to withdraw funds, Binance processed withdrawals of around $10 billion in 24 hours. It established Binance as a company with a robust system and disciplined finances. But C.Z. is also facing up to 18 months in prison. While C.Z. is currently on bail granted by the judges hearing this case, the possibility is that it would be reversed after the prosecutors filed an application saying he is a flight risk. C.Z.’s legal team has contested this and has requested that U.S. District Judge Richard Jones in Seattle not reverse the bail conditions. Smiling with a bald head and black Binance t-shirt, C.Z. has been one of the most endearing faces in the cryptocurrency world. A busy executive with easy composure, his net worth at one point in time was close to $100 billion, making him one of the top 100 richest persons in the world. C.Z. is said to be of Chinese origin with Canadian and UAE citizenship. His partner and three kids, one recently born, are in UAE, where he wants to go until the U.S. court delivers its judgement, expectedly sentencing him to a brief prison for failing in his duty as the company’s CEO. He has also been fined $50 million from his wealth. UAE is said to have no extradition treaty with the U.S. and can deny a U.S. request to extradite one of its citizens that CZ is. It’s not Binance’s first time facing a legal and regulatory problem. Its entire six-year history is replete with legal and regulatory challenges. The global corporate world stands in awe, looking at C.Z.’s energy and resilience to face and overcome these challenges while simultaneously being able to flash his trademark smile. C.Z.’s first reaction to the hefty fine that must be historic in the U.S. corporate world and his possible sentencing is that creators will keep creating! Well, this means regulators can do their jobs. Exactly a year ago, the world’s third-largest cryptocurrency exchange, FTX, collapsed, and its founder, CEO Sam Bankman Fried, fell from grace after he left the investors with a $10 billion hole in the company’s balance sheet. The FTX’s meltdown began on a Sunday when C.Z. announced that it was selling all its stake in FTX worth nearly $500 million after a news website run by another crypto giant revealed that FTX was virtually on the brink of collapse. In the next few days, investors rushed to withdraw their funds from FTX, but FTX did not have enough of them. Sam Bankman Fried is in the early 30s, while Changpeng Zhao is in the late 40s. Another difference is that Sam Bankman Fried treated his company’s accounts as his wealth and spent it like someone his age would – buying fancy properties and cars, donating to politicians and media, and showing anger at anyone questioning his decisions. What is worth noting in the trial of these two individuals is the speed with which the judges came to the decisions. And the ways they are employed to get the decisions quickly. In the case of Sam Bankman Fried, the judges did not allow him to speak more than a question-answer-answer session where he was to answer the questions in yes or no. The judges were interested in something other than his stories of how things came to this pass. In Changpeng Zhou’s case, the allegations brought to Binance were about Binance.US, its American subsidiary whose ownership C.Z. and his team tried hard to obfuscate once the regulators started investigating it. The failures of these two individuals and others in the crypto space have made the industry and regulators more mature and proactive in compliance. In the setback C.Z. has received, the crypto world has moved one step forward. (IPA Service)
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