Changpeng Zhao, founder and CEO of Binance, attracted attention at the 2022 Web Summit in Lisbon, Portugal, before stepping down and pleading guilty to a deal with the Department of Justice. Following the news, the cryptocurrency giant experienced an outflow of more than $1 billion in the past 24 hours, not including bitcoin. This comes after years-long investigations into the exchange resulting in Binance paying a $4.3 billion fine to the U.S. government.
The outflows represent a significant development and mirror a time when Binance and Zhao faced 13 securities violations the SEC. The exchange’s native token, BNB, saw over an 8% decline in the last 24 hours. Despite this hurdle, Binance remains the largest global crypto exchange, operating with billions of dollars in trading volume each year. The platform currently holds over $65 billion in assets.
Analyst Grzegorz Drozdz noted that BNB tokens saw a significant decline after the announcement, with 98 of the top 100 cryptocurrencies rebounding within 24 hours of the news. With Bitcoin also experiencing a temporary 4% loss, Drozdz predicts a possible net positive outcome for the industry following regulation disputes between Binance and authorities.
In the wake of the scandal, the question lingering in the cryptocurrency community is whether Binance can survive this turbulent period. Amid the deal, doubts surround the company’s future as it faces potential consequences, including a $4.3 billion plea deal. It has also come to light that the Binance team allowed extensive illicit transactions, with Janet Yellen stating that the exchange had permitted transactions linked to terrorist groups without filing any suspicious activity report.
With the departure of Zhao, former Abu Dhabi financial services regulator Richard Teng has been named as his replacement. In response to the situation, Binance will continue to operate under new regulations, with a focus on enhanced compliance programs in line with U.S. anti-money laundering standards. The company’s reserves will likely face scrutiny in the aftermath of the founder’s departure. Despite the challenges, experts maintain faith in Binance’s ability to weather this storm.