Blockchain & Crypto

Binance Investors Pull $956M After Changpeng Zhao Steps Down

Crypto exchange Binance saw about $956 million in outflows in 24 hours after its CEO, Changpeng Zhao, stepped down, pleading guilty to settle a years-long U.S. illicit finance probe.

Binance Investors Pull $956M After Changpeng Zhao Steps Down

Per a Reuters report, crypto investors pulled about $956 million from the crypto exchange Binance in 24 hours, following the announcement of Changpeng Zhao stepping down as CEO and facing prison time in settling a years-long U.S. illicit finance probe.

Namely, Zhao pleaded guilty to a criminal felony charge, admitting that he failed to take appropriate steps to prevent money laundering. The historic money-laundering plea deal, in which Binance will pay $4.3 billion to U.S. authorities, casts a shadow over the future of the world’s largest crypto exchange presenting another heavy blow for the crypto industry. Zhao will be replaced by Richard Teng, a senior Binance executive, previously Global Head of Regional Markets at the exchange.

However, it still remains unclear how much jail time, if any, Zhao would serve. While some sources at the Justice Department said that the agency would seek an 18-month sentence for Zhao, according to another court filing, the DOJ and Zhao agreed to a $50 million fine, but no prison time was mentioned.

Changpeng Zhao (CZ) announced the news on Nov. 21:

“Today, I stepped down as CEO of Binance. Admittedly, it was not easy to let go emotionally. But I know it is the right thing to do. I made mistakes, and I must take responsibility. This is best for our community, for Binance, and for myself.”

The new CEO asserted to the investors that:

“The fundamentals of our business are VERY strong. Binance continues to operate the world’s largest crypto exchange by volume, our capital structure is debt-free, expenses are modest, and, despite the low fees we charge our users, we have robust revenues and profits.”

Nevertheless, some investors were not confident in the crypto exchange’s future. They rushed to pull away funds from Binance, which still faces 13 charges from the SEC piling on top of accusations of regulatory evasion by the CFTC. Despite a significant sum (almost $1B), relative to Binance’s total holdings, the amount of outflows is quite small, and lower than could have been expected in such a situation.

Nina Bobro

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Nina is passionate about financial technologies and environmental issues, reporting on the industry news and the most exciting projects that build their offerings around the intersection of fintech and sustainability.