After Zhao Changpeng, investors on the Binance exchange have withdrawn more than $1 billion in the past 24 hours, excluding bitcoin, according to data from blockchain analytics firm Nansen. The founder and CEO resigned in a deal with the Justice Department and pleaded guilty.
According to CNBC, Binance has agreed to pay a $4.3 billion fine to the US government. The deal ends years of investigation into the crypto exchange.
At the same time, many investors were found to have withdrawn their money from the trading board. This coincides with being critical and closely related to what happened before the exchange and its founder were charged by the SEC with more than 13 securities violations.
Although Binance holds about $2.8 billion worth of BNB tokens, BNB has fallen more than 8% in the past 24 hours since Binance ended fee-free trading of the crypto asset in March, according to Nansen data. Pairs, including Bitcoin, are a major incentive for clients. Stock markets started falling in all spot trades.
Binance is the world’s largest crypto exchange. It processes billions of dollars every year on a commercial scale.
It still has more than $65 billion in assets, according to Nanson. This means that Binance may have enough capital to withstand the rush of investors away from the platform. And while withdrawals are increasing, there is no “mass exodus” of funds from exchanges.
Investment firm Conotoxia Ltd. Market analyst Grzegorz Drozdz of the said: “There was a moment of shock after the deal was announced. Most assets had no significant impact. Which cryptocurrencies were most affected? Binance’s BNB token lost more than 9% of its value. Out of the top 100 cryptocurrencies, 98 made a significant recovery in the last 24 hours. “Meanwhile, Bitcoin fell 4% before rebounding and remains with a loss of 1.3%,” he added.
Drozdz added that this will now be a net positive for the industry. Due to the conflicts with regulators behind Binance, the company has pledged to increase its security measures.
“This, combined with the immediate approval of ETFs based on Bitcoin prices, will have a positive impact on the crypto market in the long term.” Drozdz said.
Can Binance Survive This Crisis?
This is a question for investors in digital assets. Considering the billions of dollars in assets facing the crypto giants, Mr. After Changpeng Zhao the CEO and founder agree to a deal and leave the company. Zhao is currently facing prison in the United States. This is due to allegations related to his role in running a digital asset transaction.
CNBC experts said Binance is likely to pass the test despite the volatile situation. Citing the company’s decision to comply with the DOJ process, it implemented a three-year strategy to bring its operations into compliance. and the amount of assets held within the firm’s reserves
Milton R. Yesha Yadav, an Underwood law professor and associate dean at Vanderbilt University, told CNBC, “The $4 billion fine is a huge amount. The potential damage to Binance’s balance sheet is immeasurable. However, the penalty does not appear to be aimed at addressing serious damage to the exchange. Given Finance’s dominant position in the crypto ecosystem over the years, Mr. Given Zhao’s personal wealth and ongoing trading volume compared to other venues, despite the overall decline in crypto trading volume and Binance’s market share, we wonder how much bankruptcy risk Binance will face to pay this fine.
“A pricey $4.3 billion deal. Finance agrees to pay to extend business life”
Mr. Zhao and others were charged with violating the Bank Secrecy Act. They were found guilty of neglect and failure to comply with the anti-money laundering scheme. and deliberately violated US sanctions. “In a deliberate and calculated attempt to profit from the US market without applying the restrictions required by US law,” the US Department of Justice said.
Finance agrees to allow US government First Fed forfeiture of $2.5 billion by Justice Department and $1.8 billion in fines. The total amount owed by the company is $4.3 billion.
Merrick Garland, the United States Attorney General, said at a press conference on Tuesday that it was “one of the biggest punishments and the most valuable thing we’ve ever had. Using new technology to break the law doesn’t make you a liberal. But on the other hand, it makes you a criminal, putting Binance profits above the safety of Americans,” Garland said.
Mr. Zhao said at X on Tuesday, earlier in a post on Twitter, that he “made a mistake” and “takes responsibility for what happened.”
Mr. Richard Teng, former official of Abu Dhabi Financial Services Regulatory Authority. Zhao has been replaced by Mr. Deng’s latest position is Global Regional Market Head of Finance. He was previously Director of Corporate Finance at the Monetary Authority of Singapore.
At the same time Mrs. Treasury Secretary Janet Yellen said in a statement Tuesday that the exchange has allowed criminals to conduct more than 100,000 transactions that support activities such as terrorism and illegal drugs. And allowed more than 1.5 million virtual currencies to be traded in defiance of US sanctions.
Such criminals also allow transactions linked to terrorist groups such as Hamas’ al-Qassam. Palestinian Islamic Jihad, al-Qaeda and ISIS, Yellen noted in a statement, saying Finance had “not filed a single suspicious activity report.”
Mr. Zhao was temporarily released on $175 million bail and $15 million cash bail and will be arraigned on February 23, 2024.
Binance is struggling to stay afloat
Finance will continue to provide services. But there are new ground rules. Companies must maintain and improve compliance programs to ensure their businesses meet US anti-money laundering standards. Companies must appoint an independent compliance committee.
The case against Finance was unsealed on Tuesday. It shows that three criminal charges have been filed against the exchange. including conducting an unauthorized remittance business. Violates the International Emergency Economic Powers Act. And the conspiracy
However, some competitors, notably Coinbase, Kraken and OKX, are looking to take advantage. Coinbase and Kraken are currently involved in a legal battle with the SEC, which affects Coinbase. It has been accused of acting as an unauthorized securities exchange, brokerage and clearing agency.
A day earlier (on Monday, November 20), the US SEC filed a lawsuit against Kraken, accusing it of exchanging $33 billion worth of customer crypto assets with cryptocurrency assets. This creates a significant risk of losing users.
Yadav, of Vanderbilt University, said Finance’s reserves will come under scrutiny. He added that Binance’s efforts to provide strategic transparency have “struggled” since FTX’s collapse as investors gauge where it will go following the departure of the company’s CEO.
Binance publishes Proof of Assets Balance Sheet which is a system that shows the amount of assets and liabilities. But the evidence supporting this is based on limited data. Can be published from public blockchain. and is not equivalent to full censorship.
“There is no doubt that finance’s balance sheets will come under scrutiny in the coming months,” explains Yadav. Level of Internal Governance and Risk Management”
“This digital asset exchange space is a space we’ve known for a long time to be opaque. The same is true of inaccessible capital. And a corporate structure that makes its complexity inaccessible to regulators like the CFTC. And examine the interactions between these systems. And Binance to engage in activities that violate applicable regulations. provides a way to,” concluded Yadav.
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