New York, USA, Nov 21 (EFE).- The heavy hand that US authorities have been applying to the cryptocurrency sector for the past few months brought down another of its heavyweights on Tuesday, the head of the largest global exchange platform Binance, Changpeng Zhao.
Zhao, known as “CZ”, resigned on Tuesday as part of an agreement to settle allegations of money laundering in the company, which will have to pay fines of $ 4.3 billion (about 3.94 billion euros) but can continue its operations, albeit without the participation of its founder.
The decision was announced at a press conference by US Attorney General Merrick Garland, Treasury Secretary Janet Yellen and Chairman of the Commodity Futures Trading Commission Rostin Behnam, who stressed the importance of the move for the US government.
The fall of CZ, one of the most influential figures in the crypto world, comes amid a year-long investigation by the Securities and Exchange Commission, whose chairman, Gary Gensler, set out to impose order on the Wild West of crypto following the collapse of the FTX platform in November 2022.
CZ had a lot to do with FTX’s downfall: after he expressed concerns about his rival’s solvency and announced the sale of his stake, investors panicked and pulled their money out, resulting in an $8 billion hole and eventual bankruptcy.
A long list of crypto companies charged by the SEC
The list of companies that enjoyed strong growth thanks to regulatory laxity and are now being charged by the SEC for breaking the law continues to grow: Kraken, Coinbase, Gemini, Genesis and Terraform, to name a few.
In most cases, the SEC argues that the cryptoassets handled by these platforms are in the same category as securities regulated by federal law and should be registered as such, which the companies refute and have generally denied.
However, the SEC, which accused Binance of the same thing in June, is not part of Tuesday’s settlement.
In this case, authorities put the spotlight on Binance for allegedly committing money laundering crimes through their presence in countries such as Iran and Russia, which are subject to sanctions by the US government, according to indictment documents.
“And let me be clear: We are also sending a message to the virtual currency industry more broadly, today and for the future. If virtual currency exchanges and financial technology firms wish to realize the tremendous benefits of being part of the US financial system and serving US customers, they must play by the rules,” said Treasury Secretary Janet Yellen.
No more laxity
The news comes as the crypto world is still digesting the fall of FTX founder and former chief executive Sam Bankman-Fried, who is awaiting a prison sentence after being convicted this month on seven counts of fraud following a criminal trial, and has another SEC indictment pending.
Regulators often emphasize that crypto platforms and other companies in the industry promote investments that are unprotected and unsupervised, leaving investors, who are generally not experts, in a vulnerable position.
This happened with the collapse of TerraUSD and Luna in May 2022, which lost virtually all of their value in five days in what the SEC called a pump-and-dump scheme orchestrated for years by their issuing platform, Terraform, and its executive, Do Kwon.
The heavy hand of the authorities has even been felt by some celebrities who rode the wave by promoting digital assets to millions of followers without disclosing that they had been paid, such as Kim Kardashian, who was fined $1.1 million.
On the other hand, the crypto players themselves are collaborating to fight crime, and on Tuesday the Department of Justice announced the dismantling of a fraud scheme using Internet romance and the seizure of $9 million worth of the stable cryptocurrency Tether, which collaborated with th authorities. EFE