The story of Binance’s resilience, regulatory hurdles, and pursuit of compliance in the dynamic world of digital finance is unraveled.
In the ever-evolving landscape of cryptocurrencies, one giant stood out above the rest: Binance. But in 2023, this titan faced its greatest challenges.
Founded in 2017 by Changpeng Zhao, Binance quickly rose to the top, dominating nearly 60% of the global crypto trading market. But, as we will see, with great power comes great scrutiny.
Later, Binance, the world’s largest cryptocurrency exchange, began to face unprecedented challenges. From legal battles with the CFTC and SEC to strategic withdrawals from key markets and a major leadership overhaul, the knock-on effects across the global crypto landscape are explored below.
March 2023: CFTC Sues Binance
March 2023 marked the beginning of Binance’s regulatory problems. The US agency, the Commodity Futures and Trading Commission (CFTC), accused Binance and its leaders of violating US laws. The CFTC claimed that Binance did not verify the identities of its customers.
This is a big deal as KYC helps prevent money laundering and terrorist financing. These charges suggest that Binance was not following international rules crucial for financial operations.
Binance Leaves Canada
In May, the exchange had to withdraw from the Canadian market, a decision heavily influenced by new regulations established by the Canadian Securities Administration. This withdrawal was a notable setback as it significantly reduced Binance’s footprint in North America.
June 2023: SEC Sues Binance
The situation worsened in June when the US SEC took legal action against Changpeng Zhao; The lawsuit covers 13 allegations, including allegations that Binance manipulated its trading volumes, misused its customers’ funds, failed to properly limit access to U.S. customers, and provided inaccurate information about its market monitoring systems.
The ripple effects of these legal challenges were felt globally, leading to Binance’s withdrawal from several European markets and intense scrutiny from regulatory bodies in other countries. These exits not only reduced Binance’s global footprint but also signaled a significant shift in the cryptocurrency trading landscape.
Binance Dismissal
After a month, in July, Binance laid off an eighth of its staff and several senior executives left the company.
Later, Binance CEO CZ took to X to clarify about the mass layoff, saying: “As we continually strive to increase talent density, there are involuntary layoffs. This happens in all companies. The figures that appear in the news are not correct.” He also said that Binance is still hiring.
November 2023: CZ Resigns
The climax of Binance’s turbulent year came in November, when Zhao pleaded guilty to violating the Bank Secrecy Act in a US court. This guilty plea, related to failure to implement proper KYC and AML protocols for US customers, resulted in Zhao’s resignation and the imposition of a $4.3 billion fine on Binance.
This fine, one of the largest in US history, was accompanied by strict supervision conditions for the next five years. Zhao’s departure was a momentous change in the crypto giant’s leadership that reflects the big event in 2023.
Binance Exchange’s Next CEO
In the wake of these tumultuous events, Richard Teng, a former regulatory official, was named Binance’s new CEO. This leadership change, along with Zhao’s internal statements and communications, hinted at a resilient outlook for Binance.
Despite the overwhelming challenges and setbacks, there was a sense of cautious optimism about Binance’s ability to navigate through these turbulent times and emerge with a renewed focus on compliance and market leadership.
By Audy Castaneda
