A major event that shocked the world recently happened in the cryptocurrency industry, that is, Binance and its founder Changpeng Zhao reached a historic settlement agreement with the United States**, paying a whopping 73The US$7.5 billion (52.7 billion yuan) fine settles multiple criminal and civil charges filed against him by the U.S. Department of Justice and the Commodity Exchange Commission.
This is the largest fine ever imposed on the global cryptocurrency industry and one of the largest fines ever issued to a financial institution in the United States**. This incident has sparked widespread attention and heated discussions from all parties, some believe that this is a complete failure of Binance and Changpeng Zhao, some believe that it is their successful whitewashing, some believe that it is a turning point in the cryptocurrency industry, and some believe that it is a demonstration of deterrence by regulators.
So, what did Binance and Changpeng Zhao do, and why were they fined so much by the United States?Are their fines reasonable?Is there any hope for their future?Will Binance's position as the world's largest cryptocurrency exchange be shaken?What impact does this event have on the development of the cryptocurrency industry?Let's take a look.
Crime and punishment for Binance and Changpeng Zhao.
Binance is a cryptocurrency exchange founded in 2017 by Changpeng Zhao, a Chinese-Canadian born in Jiangsu who has worked at financial institutions such as the New York Stock Exchange and Bloomberg. With its low transaction fees, rich currency selection, strong technical support and flexible operation model, Binance has quickly become the world's largest cryptocurrency exchange, with more than 20 million registered users, a daily trading volume of up to $20 billion, and Changpeng Zhao's personal wealth has also reached nearly $10 billion, once becoming the "richest man in China".
However, Binance's success has not been recognized and supported by various countries**, and on the contrary, it has been subjected to increasing regulatory pressure and legal challenges. Due to the decentralization and anonymity of cryptocurrencies, Binance has been accused of facilitating illegal activities such as money laundering, tax evasion, terrorist financing, etc., while also failing to comply with financial regulations of various countries, such as anti-money laundering laws, customer identity verification laws, sanctions laws, etc. As a result, Binance has been banned or restricted from operating in many countries and regions, such as China, Japan, the United Kingdom, Germany, Canada, Singapore, and others.
The U.S. is Binance's biggest regulatory conundrum because it is the world's largest cryptocurrency market and the most heavily regulated country. The U.S. Department of Justice and the Commodity ** Commission filed lawsuits against Binance and Changpeng Zhao in 2021 and 2022, respectively, accusing them of money laundering, sending money without a license, violating sanctions, illegal trading, and other crimes. If convicted, Binance and Changpeng Zhao face fines of up to tens of billions of dollars and could even be sentenced to prison terms.
In this case, Binance and Changpeng Zhao chose to settle with the United States** to avoid greater risks and losses. After several rounds of negotiations, the two sides reached an agreement in November 2023 in which Binance pleaded guilty to charges of alleged money laundering, unlicensed money transfers, and sanctions violations, and agreed to pay a $4.3 billion fine;Changpeng Zhao pleaded guilty to violating U.S. anti-money laundering laws, agreed to pay a $50 million fine, and resigned as Binance's CEO. In addition, Binance has also agreed to accept the supervision of its business by a U.S.**-designated supervisory party, and Changpeng Zhao has also agreed not to participate in any activities of Binance for three years after the supervisory party's designation. Changpeng Zhao's sentencing hearing is scheduled for February 23, 2024, and he is currently numbered at 1$7.5 billion bail is being held in the United States.
The settlement is considered a major victory for the cryptocurrency industry for the U.S. and a crushing defeat for Binance and Changpeng Zhao. U.S. Attorney General Merrick Garland said: "Binance became the world's largest cryptocurrency exchange in part because of the crimes it committed – and now it is paying one of the largest corporate fines in U.S. history." "Today's historic penalties and oversight to ensure compliance with U.S. laws and regulations mark a milestone for the virtual currency industry," U.S. Treasury Secretary Janet Yellen said. Any institution that wants to benefit from the U.S. financial system, regardless of location, must comply with the requirement to protect all of us from foreign hostile forces and crimes or face consequences. ”
Are Binance and Changpeng Zhao's fines reasonable?Is there any hope for their future?
Whether Binance and Changpeng Zhao's fines are justified is a difficult question to answer, as it involves different perceptions and evaluations of the cryptocurrency industry. On the one hand, it can be considered that this is an excessively high fine, since Binance and Changpeng Zhao did not actively engage in illegal activities, but due to the compliance flaws caused by the essential characteristics of cryptocurrencies and the market environment. Binance and Changpeng Zhao have also been trying to cooperate with regulators in various countries to find legal space to operate, but have been met with different standards and requirements in different countries. Therefore, they deserve a certain amount of tolerance and understanding, and not be punished so badly.