Several industry experts have expressed their views on the matter.
Following the resignation of Changpeng Zhao (CZ) as CEO of Binance, the cryptocurrency world is witnessing a major turning point. CZ’s decision, influenced by legal pressure from the US Department of Justice, highlights the evolving landscape of cryptocurrency regulation and compliance.
From Controversy to Compliance
Austin Campbell, founder and managing partner of Zero Knowledge Consulting, offers an insightful perspective on Binance’s transformation. It distinguishes between the “old” Binance, marred by regulatory shortcomings, and the “new” Binance, which has shown marked improvements in compliance, particularly after 2021. This transformation signifies Binance’s journey from being a platform with serious KYC/ AML to become more responsive to law enforcement and tighten its regulatory practices.
Campbell posted a lengthy message on X yesterday, which partly reads as follows:
“Let me add to this:
One of the complications with Binance is that the current Binance and the historical Binance are not the same organization. Binance pre-2021 or so? Very definitely ineffective controls, major KYC/AML issues, and so on.
Binance after that time period? Surprisingly responsive to law enforcement, much tighter KYC/AML, significantly more executives with experience and know-how in that space.
To some extent they are still viewed today through the past lens because first impressions and brand image are sticky, but I would suggest the Binance of 2023 is not the Binance of 2018.”
Adding to the speech, prominent crypto lawyer John Deaton commented on the inevitability of CZ’s decision in the face of legal pressures. Deaton suggests that accepting a settlement, which includes maintaining his stake in Binance while facing possible parole, was a strategic move that reflects the harsh realities of facing legal challenges in the cryptocurrency world.
Binance and CZ Plea Agreement with the US Government
The plea agreement between the largest cryptocurrency exchange, Binance, its founder, Changpeng Zhao and the US government, has been revealed in a court filing. The filing revealed that CZ would be the first to reach a plea deal, followed by Binance, which will be represented by a corporate officer.
The filing was released minutes before the U.S. Department of Justice is set to make a public statement on the matter. Under CZ’s plea agreement, the cryptocurrency kingpin will plead guilty to “violating and causing a financial institution to violate” several sections of the law. Bank Secrecy Act (BSA).
The filing also explicitly prohibits CZ from making “any public statement, in litigation or otherwise, that contradicts his acceptance of liability “the facts described in the information and statement of facts (…).”
A Balanced Agreement
Campbell further discusses the deal between Binance and the Department of Justice, noting its balanced nature. Neither party achieves the desired result; CZ quits, but Binance escapes and becomes another FTX. This middle ground in the agreement indicates a step towards stronger regulatory compliance in the cryptocurrency industry.
Reacting to a community member’s comment, Campbell agrees that these developments benefit the long-term health and adoption of cryptocurrencies. He sees a shift from an initial revolutionary stance against traditional systems to a more pragmatic approach, integrating cryptographic operations within existing legal frameworks.
Meanwhile, the crypto market is already recovering from the aftermath of these recent events. All cryptocurrencies in the top 20, especially BTC, Ether and BNB, have plummeted in the last hour, a painful reminder of the market’s volatility.
The crypto community now awaits official statements and more insights from Binance and CZ.
By Leonardo Perez
