Binance: why the CEO of the world’s largest crypto company had to resign

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The company has been investigated for years by American agencies for violating United States anti-money laundering laws and will have to pay a fine of US$4.3 billion. The company’s now former president, Changpeng Zhao, pleaded guilty. Changpeng Zhao, CEO of cryptocurrency broker Binance, is among the richest in the world Reproduction/YouTube Binance In a statement released on social media this Tuesday (21), Chinese Changpeng Zhao announced his resignation as president of the largest broker of cryptocurrencies in the world, Binance. “I confess that it is not easy to let go emotionally. But I know it is the right thing to do. I made mistakes and I must take responsibility for them”, said the executive. The decision was taken amid a series of legal problems that the company is facing. To end a years-long investigation by U.S. authorities against the brokerage, Zhao agreed to resign from his position and pleaded guilty to violating U.S. anti-money laundering laws. The agreement also provides for the payment of fines of US$4.3 billion (more than R$21 billion, at the current dollar rate) by Binance, with Zhao disbursing US$50 million (R$245 million) of that total. This is one of the largest corporate penalties in history, Reuters news agency learned from prosecutors in the case. What is Binance accused of? According to regulatory agencies and the American courts, Binance violated anti-money laundering and sanctions laws. Authorities in the case and the United States Treasury concluded that the broker prioritized its profits over the company’s legal obligations within the country. Binance failed to inform authorities about more than 100,000 suspicious transactions that occurred within its platform. These transactions involve terrorist groups such as the Islamic State, hackers, websites selling child sexual abuse content and other criminals. On the other hand, the American agencies concluded that Binance did not misappropriate any funds from the platform’s users, nor did it practice any market manipulation, highlighted former president Zhao. “These resolutions recognize our company’s responsibility for historic criminal compliance violations and allow our company to turn the page,” the company said. What are the next steps for Binance and Zhao? In addition to announcing his resignation, Changpeng Zhao also reported that the new president of Binance will be Richard Teng, a former company executive. “Richard is a highly skilled leader and, with over three decades of financial services and regulatory experience, will lead the company through its next period of growth. He will ensure Binance delivers on our next phase of security, transparency, compliance and growth” , said Zhao. In his personal life, the former president stated that he cannot imagine running a startup again, but that he considers becoming a mentor to a “small number of future entrepreneurs”. “At least I can tell them what not to do.” Zhao also said that he wants to take a break and that after that, he will dedicate himself to making passive investments as a minority shareholder in other technology companies. Bad wave for crypto companies Zhao’s departure and the billion-dollar fine for Binance come shortly after another major problem involving a cryptocurrency company. The founder of the FTX brokerage was convicted, in early November, of seven counts of fraud and conspiracy, which could see him sentenced to up to 20 years in prison. FTX’s problems began when the media began reporting that, to save Alameda Research, an investment fund also created by Bankman-Fried, the executive lent money from FTX itself to the company. The information is that he used client funds that were deposited with the brokerage to finance Alameda’s operation, which is illegal — since, although they are owned by the same owner, the companies’ business must occur separately. The news came to light in early November, along with Alameda’s balance sheet. The document revealed that around US$14.6 billion was held in FTT (the FTX token, a type of official currency on the platform). As a result, the broker’s clients began a rush to withdraw their deposits, afraid of losing their resources. Because it did not have enough dollars to cover all the withdrawals, FTX went bankrupt and filed a request for judicial recovery in American courts on November 11th. The company went bankrupt and caused Bankman-Fried to lose everything.

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