The world of cryptocurrencies and its exchanges had just barely begun to breathe easy since FTX and Sam Bankman-Fried’s fiasco. However, its calm world came crashing down anew on 21st November 2023. This time on account of the crypto exchange, Binance and its chief executive, Changpeng Zhao, whom the US authorities found guilty of committing transactions contravening the financial policies it had mandated and put in place, in the sector.
Such financial policies specifically included the lack of attention Binance and Zhao paid towards following the law pertaining to protection from potential money laundering. In addition, the company was also lackadaisical in its implementation of robust KYC (Know-Your-Customer) programs.
After his conviction, on the social media platform, Zhao posted, “I made mistakes, and I must take responsibility. This is best for our community, for Binance, and for myself.”
But Zhao’s acknowledgement of his guilt on social media can’t takeaway from the malfeasance he allowed to perpetuate in an attempt to ensure his company’s profit-making continued unchecked.
Speaking with the media following Zhao’s conviction, Merrick Garland, an Attorney General handling the federal case shared, “Binance employees knew and discussed that the company was serving thousands of users in sanctioned countries, and they knew that facilitating transactions between U.S. users and users in sanctioned countries would be in violation of U.S. law. But they did it anyway.”
In fact, a report published on CoinDesk states that Zhao was also unapologetic about the ways and means his company he employed to further their business goals. The report quotes Zhao to have said, “Better to ask for forgiveness than permission” regarding their unethical business practices.
As such, now in light of these developments, Zhao’s apology comes across as far too late, and quite superficial. Nonetheless, his acceptance also underscores the need for much more stringent and effective regulatory norms to be enforced in the grey-shaded area that’s digital currency.
Needless to say, the call for necessary action to be taken in order to maintain the continuity of the domain while primarily focusing on the safeguarding of the interests of those who use the digital currency channels has gotten only louder. These calls have become heightened not only in the US but also in countries such as India, where cryptocurrency and digital exchanges have long been at crossroads with the government.
In this context, speaking to Deccan Herald, the chief executive and co-founder of Indian cryptocurrency exchange, Unocoin, Sathvik Vishwanath said, “Binance CEO CZ’s resignation and anti-money laundering violations could potentially intensify regulatory scrutiny of crypto activities in India, prompting authorities to reassess and strengthen their regulatory framework, increasing compliance pressure on domestic stock exchanges in India.”
It’s in the midst of such clamouring for better reinforcement that the cryptocurrency world and its vast and varied clientele head towards a new dawn. And as they do so unknowing of how this world of theirs will shift, in the days to come, in terms of absolute numbers there are two figures that stand out the most.
The first’s the $50 million fine Changpeng Zhao now needs to pay as settlement fine to the American federal authorities. The second’s the $4.3 billion his company has to settle to the government. Neither is a small amount. Yet, it feels like a stone thrown in the murky waters of digital currency where quite a lot of folks could’ve been financially ruined in a way worse manner thanks to Zhao and Binance’s untrammelled hubris.
Thus, in order to set a better example from hereon so that it doesn’t continually cough up the likes of Zhao and Bankman-Fried, it’s about time digital-currency sector underwent a massive course correction.
