On Tuesday, the Department of Justice unveiled sweeping money laundering and fraud charges against Binance, the world’s biggest crypto-trading platform, prompting its leader, Changpeng Zhao (“CZ”), to resign and pay a $50mn fine. Binance also made a $4.3bn settlement, marking “one of the largest corporate penalties in US history”, as Merrick Garland, attorney-general, triumphantly declared.
Some observers might think — or indeed hope — that this marks the demise of crypto. A year ago CZ presented himself as the clean saviour of the industry, after his ally-turned-bitter-rival Sam Bankman-Fried (“SBF”), co-founder of the FTX platform, was charged with fraud. Now, the men who were both heads of the world’s two biggest crypto exchanges are deemed criminals. This is like the moment in a spaghetti Western movie when the sheriff rides in after rival gangs have a shootout. But here is a curious thing: on Wednesday, Binance’s BNB token rallied modestly to sit 60 per cent below its 2021 peak — but 10 per cent up from last month. Meanwhile, bitcoin’s price has doubled this year, leaving the overall crypto sector valued at about half its level two years ago — but 50 per cent bigger than late 2022. Crypto may have shrunk but it is not dead.
