Bankless: What Does the Binance Ruling Mean for the Crypto Industry?
Overall, Binance may no longer possess the agility it once had in pursuing new opportunities.Original Author: Jack Inabinet, Bankless
Original Title: 《What the Binance Judgment Means for Crypto》
Translation: 深潮 TechFlow
On Tuesday afternoon U.S. time, U.S. regulators held a meeting in Seattle, determining that the largest cryptocurrency exchange violated U.S. anti-money laundering laws and the Bank Secrecy Act.
Binance has reached an agreement with federal agencies to end a criminal investigation into the exchange that began in 2018.
CEO Changpeng Zhao (CZ) must step down for at least three years, but the exchange he owns can continue to operate. To resolve this issue, Binance will pay a hefty fine of $4.3 billion, setting a record for the seventh-largest financial compliance fine in history. However, the company appears to have sufficient assets to pay the fine without selling crypto assets.
Did Binance Do Wrong?
Clearly, Binance and CZ violated U.S. laws. Unlike the attacks on DeFi protocols and exchanges that failed to "comply" with unwritten rules, regulators believe they are dealing with a willful disregard for established laws.
The complaints against Binance mention numerous examples of compliance personnel facilitating illegal access to international platforms for U.S. customers, citing multiple transactions related to terrorist organizations and illicit finance.
Additionally, leaked chat messages reveal that company executives directly acknowledged criminal behavior over the years.
What Does the Future Hold for Binance?
Despite operating as the largest cryptocurrency exchange for many years, Binance's future seems quite challenging.
Binance has faced difficulties in obtaining licenses or operating in multiple jurisdictions, including Australia, Austria, Belgium, Canada, Cyprus, the Netherlands, and Germany. Today's announcement will provide foreign regulators with the opportunity to impose fines or directly prevent the exchange from operating within their jurisdictions.
Moreover, while Binance will be allowed to continue operations, the agreement includes strong monitoring and oversight provisions, presenting significant compliance hurdles. Binance must also tread carefully to avoid improper practices like money laundering and illegal trading that have brought in trading volume over the years.
Overall, Binance may no longer possess the agility it once had in pursuing new opportunities.
Where is the Future of Cryptocurrency Heading?
The market reacted mildly to today's news; there was no liquidity exit or immediate sell-off following the announcement.
The Department of Justice has conducted a thorough review of Binance and found no fatal flaws that could lead to bankruptcy and trigger another crypto collapse. Assuming there are no further developments or investigations in the Binance case, we can consider that the cryptocurrency sector has significantly reduced the risk of such pending issues.
Although today's regulatory actions did not clearly outline the various opaque rules the U.S. government expects cryptocurrency companies to follow, they did demonstrate that some actors in this space are more prone to willful defiance than participants in other sectors, and are not focused on long-term development.
The struggle between cryptocurrency and regulators will be arduous and will also face unfair aggression and excessive bureaucratic interference. Gensler is not the only adversary. However, from the minimal price movements, it is clear that Binance's risk exposure here is well-known and has been priced in. Now, cryptocurrency can strive towards clearer goals, ushering in another bull market.
