Changpeng “CZ” Zhao, founder of Binance, might never return to manage the cryptocurrency exchange, says the current CEO.
A 2023 settlement with U.S. authorities indeed includes a permanent ban from managing Binance and a significant fine. Let’s see all the details below.
The permanent ban of CZ: a new chapter for Binance and the new CEO
As we know, Changpeng “CZ” Zhao, an iconic figure in the world of cryptocurrencies, has led Binance as CEO towards its current position of dominance.
However, recent legal developments have definitively removed him from the management of the company he co-founded.
According to a report from September 5, 2023, published by Axios, CZ has been permanently banned from any future involvement in the management or operation of Binance.
This decision emerged as part of a settlement between Zhao and the U.S. authorities, which also includes a multibillion-dollar agreement and a series of legal consequences for the platform.
In November 2023, a settlement agreement of 4.3 billion dollars was reached between Binance and the United States authorities.
The agreement was born following an investigation that led to the discovery of violations of the Bank Secrecy Act, a US law aimed at combating money laundering.
Zhao pleaded guilty to a charge related to these violations and, as part of the agreement, was sentenced to four months of detention.
The exit of Zhao from the management of Binance was seen as one of the key elements of the agreement.
Although at the beginning it was thought that the ban would be temporary, with a limit of three years, the current CEO of Binance, Richard Teng, revealed that the ban is instead permanent.
This means that CZ will never again be able to hold a managerial role within the company, nor participate in the operational management of the exchange.
According to Teng, the measure was adopted to ensure that the exchange can continue to operate in compliance with international regulations and to promote an image of transparency and responsibility.
The replacement of CZ and the new leadership of Binance
After the plea deal, Zhao left the role of CEO of Binance and Richard Teng took over the leadership of the company.
Teng, who had already held prominent positions within Binance, is now tasked with advancing the evolution of the exchange in a context of increasing regulatory pressure.
At the time of his appointment, Zhao stated that he would offer his support to the team if needed, but would let Binance proceed independently to face future challenges.
Despite Zhao’s departure, Binance has continued to evolve under Teng’s leadership, seeking to implement corrective measures in line with regulatory authorities’ requirements.
Part of these measures included the definitive ban of CZ, even though it was not explicitly required by the legal terms of the settlement.
The company has nevertheless decided to adopt this line, probably to reassure the authorities and improve its public image, compromised by previous legal issues.
Zhao, furthermore, was required to personally pay a fine of 50 million dollars.
These sanctions represent one of the largest settlements ever reached in the criptovalute sector, highlighting the growing attention of authorities towards the regulation of digital asset exchange platforms.
In addition to financial sanctions, Binance must face the consequences of a long legal battle with the Securities and Exchange Commission (SEC) of the United States, which has initiated a separate investigation into the company.
Even though the case is still ongoing, there have been recent developments that could limit the authority of the SEC in the realm of cryptocurrencies. This follows some decisions by the Supreme Court of the United States.
However, the situation remains uncertain, and Binance continues to closely monitor future legal implications.
The impact on the reputation of Binance and the crypto sector
The departure of CZ from the management of Binance and the settlement with the U.S. authorities represent a significant turning point for the company and for the cryptocurrency sector in general.
Binance has long been at the center of global attention for its predominant role in the digital asset market. Additionally, the recent legal issues could have a lasting impact on its reputation.
Despite this, CEO Teng stated that Binance is now a “totally different” company, committed to improving its regulatory compliance and working more closely with regulators around the world.
This change in strategy could help Binance restore user trust and ensure a leadership position in the cryptocurrency market.
In any case, the exit of CZ from Binance marks the end of an era for the world’s largest cryptocurrency exchange.
The permanent ban of Zhao from managing the company was a necessary measure to ensure legal compliance and to address the issues arising from past violations.
With a fine of billions of dollars and a series of new legal challenges on the horizon, Binance now finds itself at a crucial turning point.
Under the guidance of Richard Teng, the company will have to demonstrate that it can overcome these difficulties and continue to grow in an increasingly regulated market.