The notch is visible on the bitcoin chart. It was Tuesday afternoon and the news broke: Binance, the largest cryptocurrency platform on the planet, the place through which approximately six out of every ten euros invested in cash in this business pass, reached an agreement with the Department of Justice, the Treasury and the United States Futures Market Commission to pay a record fine of 4,368 million dollars (about 4,000 million euros) for violating laws against money laundering and the regulation of securities markets. Furthermore, its CEO, the Canadian of Chinese origin Changpeng Zhao, a charismatic boss to whom everyone in the crypto community listens attentively – 8.7 million followers on X, where he identifies himself with the initials by which he is best known, CZ—, was forced to resign after pleading guilty to failing to maintain an effective anti-money laundering program.
The next thing most digital currency investors did was check the market digestion to see if their money had been affected. How was the decision made by bitcoin? The precedent of the bankruptcy of the FTX platform a year ago caused significant damage to its price, but in this case the consequences seemed much minor: the operations of Binance users were not affected, nor did anyone lose their funds. Only an acceptable sanction if you take into account that Binance’s derivatives business earned more than $1 billion a month in May 2021. And a change at the top, now in the hands of Richard Teng, a veteran finance specialist born in Singapore with experience in monetary issues and regulation who came to the firm just two years ago.
The blow to the price of bitcoin, therefore, was slight and painless. The price has already recovered the price prior to the news. And Binance continues to operate as if nothing had happened. Only his former boss, Changpeng Zhao, who not so long ago climbed to the positions of honor on the Forbes list above names like Mark Zuckerberg, saw his routine change radically, without yet fully assimilating his change of role and the end of a busy schedule full of business trips. “I am “enjoying” all the free time that I suddenly have now,” he stated in that he left in his company, has come out well.
Bitcoin, meanwhile, has accumulated gains so far this year of 127%. It is worth almost 38,000 dollars, still far from the almost 69,000 that it reached at its best, back in November 2021, but it is one of the assets that performs best in 2023.
The effect of the Binance case, in short, does not seem significant for the sector. This is what analysts like Manuel Villegas, from the Swiss wealth manager Julius Baer, believe. “Regulatory hurdles arising from these developments are likely to increase, but overall we do not believe they will hinder the long-term evolution of this asset class.”
Andrew Carrier, executive at blockchain firm Quant, believes the times of impunity are over. “This is just the latest installment in the welcome demise of the unregulated cryptocurrency market. Cases like those surrounding FTX and Binance symbolize the fall of the personality of the cryptobroas these high-profile figures officially move on from cowboys to complete criminals. The good news is that much of the world already has regulations in place to address fraud and ineptitude in decentralized finance and blockchain technology. In the future they will mature and become professional until they are culturally unrecognizable,” he defends.
It also remains to be seen its effect on aspects such as reputation, which for now has led other competitors to distance themselves from their bad practices. Binance’s US business, for example, depended on a Cayman Islands limited liability company.
Leif Ferreira, CEO of the Spanish cryptocurrency platform Bit2Me, has long been critical of the opacity with which Binance manages its accounts. “At Bit2Me from the first minute we are committed to a long-term strategy, based on regulatory compliance, transparency and consumer protection. We are based in Spain, far from tax havens, in a region (the European Union) with a very clear pro-consumer jurisdiction and we have worked to face the challenges that the new MiCA Law will pose,” he insists.
Even so, the entire sector would have been hit if the sanctions on Binance had been harsher, so the end of the process has come as a certain relief. In the end, as summarized Bloombergone way of seeing what happened is that it is a defeat for CZ, stripped of its power in the firm, and a victory for the crypto market, free for now from the rumor and uncertainty about the fate of one of its main actors .
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