Start your day with intelligence. Get The OODA Daily Pulse.
Informing your decisions with actionable intelligence
Start your day with intelligence. Get The OODA Daily Pulse.
Informing your decisions with actionable intelligence
What we were first tracking as classic “creative destruction” now continues to sit firmly in the “destruction destruction” column, as this $4.3B Binance settlement is announced weeks after FTX’s Sam Bankman Fried was convicted in early November (and awaits his March 2024 sentencing hearing). With that, we remain bullish on the “bottom up” global crypto adoption trends and the underlying blockchain technology (which we addressed at OODAcon 2023 last month). Stay tuned for more end of year OODA Loop Original Analysis of both themes. For now, find the details here of the Binance train wreck.
As reported by CoinDesk:
Binance, the world’s largest crypto exchange, was criminally charged with breaking sanctions and money-transmitting laws and agreed to pay $4.3 billion to settle the allegations in “one of the largest penalties” the U.S. has ever obtained from a corporate defendant. Founder Changpeng “CZ” Zhao pleaded guilty in Seattle to charges he personally faced and agreed to pay a $50 million fine, as well as step down from the CEO job. Richard Teng, a former Abu Dhabi regulator and later Binance’s regional markets head, will take over as CEO. Binance was accused of failing to maintain a proper anti-money laundering program, operating an unlicensed money-transmitting business and violating sanctions law, according to a court filing unsealed on Tuesday.
The $4.3 billion Binance is paying is among the largest penalties ever obtained from a corporate defendant, Garland said. The exchange’s overall fine remains $4.3 billion, with some amount being credited to each agency. Separately, the U.S. Treasury Department and CFTC announced their own settlements with Binance. Treasury Secretary Janet Yellen noted that Binance’s settlement with her department’s money laundering and sanctions watchdogs was the largest in Treasury history.
Under the terms of its plea, Binance will have to appoint an independent compliance monitor for three years and report its compliance efforts to the U.S. government, alongside the fines. Zhao is prohibited from “any present or future involvement in operating or managing” Binance, though that ban ends three years after the monitor is appointed. A resolution of the Binance case represents another major U.S. government victory against a big crypto player, coming just weeks after FTX founder Sam Bankman-Fried was found guilty of fraud and conspiracy charges tied to his crypto exchange.
Zhao “prioritized Binance’s growth, market share and profits over compliance with” U.S. banking regulations, according to unsealed filings. “Better to ask for forgiveness than permission,” he told his employees, the document said. That mindset pervaded Binance’s operations in what Zhao termed the U.S. “Grey zone.” He saw to it that Binance did not collect “know-your-customer” information on its users because he believed it would inhibit its growth and appeal.
Nikhilesh De of CoinDesk provides an opinion piece on the Binance settlement – which provides interesting details and perspective – and extends his analysis to the ongoing SEC filing against the Kraken crypto exchange:
“Binance and Changpeng “CZ” Zhao settled with multiple federal agencies on Tuesday, agreeing to pay billions of dollars in a deal that will also see Zhao face potential prison time, Binance make a “complete exit” from the U.S. and agree to strict oversight from monitors over the next several years.
If you missed Tuesday’s regulatory extravaganza:
For previous OODA Loop News Briefs and Original Analysis, see:
For those taking the long view, holding on to their crypto boosterism stance and interest in the potential of blockchain technologies, see:
Bitcoin’s Momentum: Bitcoin seems unstoppable due to solid mathematical foundations and widespread societal acceptance. Other cryptocurrencies like Ethereum also gain prominence. The Metaverse’s rise is closely tied to Ethereum’s universal trust layer. See: Guide to Crypto Revolution
About the Author
Daniel Pereira is research director at OODA. He is a foresight strategist, creative technologist, and an information communication technology (ICT) and digital media researcher with 20+ years of experience directing public/private partnerships and strategic innovation initiatives.
Informing your decisions with actionable intelligence
Informing your decisions with actionable intelligence