CEO Binance CZ Pleads Guilty: Future of BNB

Muhammad Naeem

Blogger

Binance is the world’s largest crypto exchange by volume and its founder and ex-CEO Changpeng Zhao, aka CZ, is facing serious legal challenges for some notorious transactions on Binance. On November 21, 2023, CZ stepped down from his position after he pleaded guilty to money laundering charges by US Security and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC). Binance has to pay heavy fines and comply with US laws. This has created a sort of uncertainty about the future of Binance and Binance Coin BNB.

Why did CZ leave Binance?

CZ founded Binance in 2017 and became a titan behind Binance by making it the top cryptocurrency exchange. Binance builds an entire ecosystem around it. Binance Smart Chain emerged as a faster and more efficient blockchain where developers can use different tools to build their dApps and offer crypto tokens.

It offered a native crypto token Binance Coin BNB which is now among the top 5 coins in the crypto space with respect to marketcap. NFTs, games, crypto academy, Binance earn, Binance DEX, Binance Web3 wallet, and whatnot – Binance became one of the richest ecosystems in the blockchain world. BNB coin had an all-time high price of $690.93 in May 2021 when Bitcoin was at its peak price.

As Binance flourished it attracted regulatory eyes towards itself as it was hard to comply as blockchain is still an infant product. Binance is charged for unregistered operations, money laundering, violating security laws, and endangering investors. Following this, it was banned in many countries including the UK, Japan, Germany, Italy, Singapore, Thailand, Hong Kong, Canada, and the US.

On November 21, 2023, CZ was booked by the court where he pleaded guilty and was sentenced to 18 months in jail starting from February 2024 if the appeal fails. However, he was later released on a $175 million appearance bond. The bond included some additional cash and collateral as well.

CASH or COLLATERAL:

• $175 million personal recognizance bond.
• $15 million held in DWT trust account.
• Property pledged by FRP: No property must be posted as security with the court, but the owner(s) must complete and sign an Agreement to Forfeit Property form…
• Guarantor #1 - $250,000
• Guarantor #2 - $100,000

Overall, Binance had agreed to pay a fine of $4.3 billion, the highest fine in the history of the US.

Binance exchange holds $6.7 billion worth of assets. So, does any of this impact the crypto market? I guess, No. Does it impact the Binance ecosystem? It could but things get clearer as new leadership takes the decisions. Does this kill BNB? This is very unlikely to happen – and I have reasons to support this.

Past Precedents of SEC and Crypto:

• In 2019 Bitfinex and Tether, both linked to the same person, faced legal troubles. Both had to pay an $18.5 million fine to the SEC.
• In 2020, the US SEC and CFTC charged BitMex crypto exchange for anti-money laundering charges. BitMex had to pay $100 million in fines and comply with the regulations and laws of the authorities.
• SEC recently sent legal notice to the Kraken cryptocurrency exchange and it could be the next in line facing legal actions.

Future of BNB Coin:

Richard Ting is the new CEO of Binance replacing CZ in his new role. Richard Ting was been Chief regulatory officer at the Singapore Exchange (SGX), the Country’s exchange, and Derivatives markets in 2010. Richard has been involved in making listing rules, risk management systems, and securities trading rules. He relocated to Abu Dhabi in 2015.

Here, he was appointed CEO of the Financial Services Regulatory Authority (FSRA) at the free-zone and international financial hub Abu Dhabi Global Market (ADGM).

In August 2021, Richard joined Binance as the CEO of Binance Singapore with new responsibilities like expanding Binance operations and complying with the local laws. Richard taking the top spot in Binance is a positive indication he is a man with sound background. This means that overall, we can expect the Binance ecosystem to flourish in the future. But the case with crypto coins is always different as a little FUD can kill an entire project.

The settlement agreement between Binance and the US regulators also has significant implications for the future of BNB, the native token of Binance. The news of ChangPeng Zhao pleading guilty increased the volatility of BNB price but it recovered very soon as the impact was not very negative. One of the reasons for such a positive reaction could be CZ stepping down as CEO in time.

The green vertical area in the above chart shows the market reaction to the news which was a mix of red and green candles. However, the small drop from the yellow region is because Bitcoin prices dipped a bit during that period. The yellow region is the value area for BNB price. The coin is struggling to re-enter this region.

This positive reaction of the BNB community to the news is because people constructively took the settlement. The settlement between Binance and SEC increase the legitimacy and accessibility of Binance products including BNB in the US and other markets. The settlement could also enhance the utility and functionality of BNB, as it would enable Binance to offer more compliant and innovative products and services that use BNB as a payment or reward mechanism.

Takeaway:

The price of BNB is slowly strengthening after a minor blow and the legal action against Binance doesn’t impact the future of BNB in any way. CZ might see some challenges in the near future, however, since he is not a part of Binance anymore, this shouldn’t impact its ecosystem. Binance's new CEO has a strong history of compliance and regulations. This should help Binance complies with the regulations and targets a wider audience including the US and other countries.