(Note Bankless is the name of a publication or platform)

Bankless Where the Unbanked Thrive

Author: Jack Inabinet, Bankless Analyst; Translation: LianGuaixiaozou

On Tuesday afternoon, US regulatory agencies held a meeting in Seattle to determine that the largest cryptocurrency exchange has violated US anti-money laundering criminal requirements and the Bank Secrecy Act.

Binance has reached agreements with several federal agencies, concluding the criminal investigation into this cryptocurrency exchange since 2018.

CEO Changpeng Zhao (CZ) must resign for at least 3 years, but the exchange can still continue its operations.

• Crypto Market Faces Whirlwind of Volatility: Binance and Former CEO CZ Hit with Record-breaking $4.3 Billion Settlement
• Binance’s CEO Steps Down Amidst Billion-Dollar Drama
• Binance Founder CZ, World’s Largest Bitcoin and Crypto Exchange, to Step Down as CEO and Plead Guilty

Binance will pay a huge fine of $4.3 billion to resolve this issue, which is the seventh-largest financial regulatory fine in history. However, Binance seems to have enough assets to pay the fine and does not need to sell any crypto assets.

Today, let’s answer your burning questions about the latest cryptocurrency regulatory actions!

1. What did Binance do wrong?

Binance and CZ have clearly violated US laws. Unlike the insignificant attacks on DeFi protocols and exchanges for “failing to comply” with an unwritten set of rules, Binance became a target of regulatory agencies because they believed it deliberately disregarded established laws.

We see that the charges against Binance mention several examples of compliance personnel providing white glove services to illegally attract US customers to international platforms and cite multiple transactions related to terrorist organizations and illegal financing.

In addition, leaked chat messages show that Binance executives have been openly admitting criminal activities for years, providing evidence to regulatory agencies.

2. What will happen to Binance next?

Although Binance has been a top-tier cryptocurrency exchange for many years, its future prospects look rather difficult.

Binance has already encountered significant challenges in licensing or operations in many jurisdictions, including Australia, Austria, Belgium, Canada, Cyprus, the Netherlands, and Germany. The recent statement will undoubtedly pave the way for foreign regulatory agencies to impose fines on Binance or directly prevent the exchange from operating in their jurisdictions.

In addition, while Binance is allowed to continue its operations, it comes with strong regulatory terms that pose significant compliance obstacles. Binance must also act cautiously, avoiding illegal activities like wash trading and money laundering that have potentially contributed to its trading volume for years.

In summary, Binance may no longer be as agile as a startup and can no longer pursue growth opportunities recklessly.

3. What’s next for cryptocurrency?

The market remains calm in light of today’s news. There have been no signs of liquidity drain or immediate rush to exit.

Although Binance may be the beginning of the end, it seems that the US Department of Justice has conducted a comprehensive examination of their closest departments and found no fatal flaws that could lead to bankruptcy and another cryptocurrency crash – which is something to be thankful for on Thanksgiving. Assuming there are no further developments and investigations into the Binance case, it is safe to say that the cryptocurrency has significantly reduced this pending risk.

While today’s regulatory actions did not explicitly outline the various opaque rules that the US government wants cryptocurrency companies to comply with, it does indicate that some players in the field are more intentionally non-compliant than others and have not prioritized the actions of cryptocurrency companies. This careless behavior has harmed other parts of the industry.

The struggle between cryptocurrency and regulatory agencies will be challenging and will face unfair interference and excessive bureaucracy. Gensler is not the only enemy. But from the smallest price movements, it is clear that the risk exposure of Binance is well-known and priced in. Now, cryptocurrency can propel another bullish market with a clearer perspective.

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