World’s largest crypto exchange, Binance has seen a massive outflow of assets following news that its CEO Changpeng “CZ” Zhao Was resigning after pleading guilty to criminal charges in the U.S.
Data from DeFiLlama revealed that the exchange recorded a net outflow of over $1 billion within 24 hours following CZ’s resignation. Of the $1 billion, $605.9 million came across the Ethereum, BNB chain, Avalanche, Fantom and Polygon networks, data from on-chain analytics platform Nansen also revealed.
CZ also agreed to pay a $50 million fine, in addition to Binance’s $4.3 billion fine after it pled guilty to several counts including money laundering, conspiracy to conduct an unlicensed money transmitting business, and sanctions violations.
Commenting on the incident, chief commercial officer of crypto market maker Auros, Jason Atkins told The Block that there is a second-order effect around market sentiment as “developments, such as the fines levied on Binance by the DOJ, are indicative of the positions of various regulatory bodies when it comes to historical infractions.”
“We anticipate that this will accelerate the outflow of projects, exchanges, founders and firms from direct U.S. regulatory purview,” Atkins said. “Compliance will now be non-negotiable so as to minimize lapses in the AML and KYC requirements in the U.S., irrespective of the country of incorporation.”
BNB Down 9% Following News
Following the news of CZ’s resignation and the $4 billion settlement, Binance’s cryptocurrencies Binance Coin (BNB) dropped over 9%. Though it had been down for some time, the token was already recovering, reaching over $466.
However following the news, BNB has dropped to new lows, currently trading at $231.17 at the time of writing this report. As the general crypto market is also bleeding, it is not likely that BNB will see a bounce anytime soon.
This may be as a result of investors losing interest in the token as CZ pleaded guilty to criminal charges leveled against him.
Looking to the Future
Although the settlement and resignation of its CEO was a major blow to Binance, the exchange has since moved on and is already planning for the days ahead. The exchange in a blog post yesterday admitted that it lacked adequate compliance controls in its early days, but tried to frame a positive vision for the future.
Binance emphasized that it has “worked hard to restructure our organization and personnel and upgrade our systems.”
“With the compliance and governance enhancements enshrined in our commitments, we can begin to share our vision for Binance’s exciting future and the future of the crypto industry. We are confident that Binance will emerge as a stronger company as we lay the foundation for the next 50 years,” it wrote.
The company maintained that it has at all times maintained 1:1 backing for user assets, highlighting that, in the settlement, U.S. regulators did not allege misappropriation of user funds or market manipulation.
Key players in the crypto industry have expressed optimism that Binance’s settlement is positive for the industry, and that it will allow the industry to move on and make progress. Meanwhile, regulators are going after more exchanges with Kraken being the latest.
Coinbase which is already in court could be next in line for a settlement as this is fast becoming the norm with regulators in the U.S.
