Changpeng Zhao, the Chief Executive Office (CEO) of the worlds biggest crypto exchange, Binance has been forced to step down from his position.
Zhao pleaded guilty to breaking United States anti-money laundering laws which would result in his firm, Binance paying a record $4.1 billion fine in addition to a personal fine of $50m for Zhao.
Binance is accused of allowing its platform to be used by criminal elements including terrorist organizations like Hamas, Al Qaeda and the Islamic State of Iraq and Syrian. The organizations were said to be using Binance for criminal transactions which contravened US and international law and sanctions.
Binance is also accused of not reporting transactions involving receipt of ransomware proceeds and for transacting with websites noted for dealing with child-porn materials.
Zhao who was born in China but moved to Canada, started Binance in 2017 and had become one of the most prominent figures in the crypto world following the wind up of FTX, a rival crypto exchange.
Recall that FTX founder, Sam Bankman-Fried had been convicted recently of fraud with the winding up of FTX which caused billions of dollars of losses to users of the exchange.
Richard Teng, an executive at Binance has been announced by Zhao to be the new CEO.
The bigger question now is where does Binance go from here?
The crypto industry has been under the searchlight of the United States Justice Department for the last couple of years following the rise of the industry.
The $4.1 billion fine and ousting of Zhao will definitely not be the end of the matter.
Merrick Garland, the US Attorney General is quoted as saying:
“Binance made it easy for criminals to move their stolen funds and illicit proceeds on its exchanges, Binance also did more than just fail to comply with federal law. It pretended to comply.”
What happens next is anybody’s guess. How will the millions of users of Binance around the world perceive the ongoing investigations and fines?
Recall, that FTX collapsed in a more dramatic manner due to a run on the exchange.
Bankman-Fried, the convicted CEO of FTX was accused of illegally moving billions of dollars of customer funds to a third-party platform which he controlled. Same allegations have been made against Zhao.
Will Binance face same issues because the exchange is now firmly in the sights of law enforcement for numerous criminal breaches? The size of the fines on Binance is indicative of a US government crackdown of the crypto sector.
Binance has thousands of users on its platform in Nigeria. Any further crackdown or windup of the exchange would definitely be detrimental to such users, who could face losses in the billions of Naira.
