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Binance's summer began with an SEC lawsuit, and the fall ended with a $4.3 billion fine and the departure of the company's founder, Changpeng Zhao (CZ), from the position of CEO. ForkLog recalled the difficult last six months for the cryptocurrency exchange and highlighted key events.
June
On June 5, the SEC sued Binance and CZ, bringing 13 charges, including unregistered offers and sales of BNB and BUSD tokens, Simple Earn and BNB Vault products, and staking.
The Commission claimed that the company failed to register its platform Binance.com as an exchange, broker-dealer, or clearing agency, just like the US division — Binance.US.
In addition, the SEC has qualified SOL, ADA, MATIC, FIL, ATOM, SAND, MANA, ALGO and AXS tokens as securities.
According to the agency's lawsuit, Zhao and his company allegedly controlled the assets of clients, mixed and redirected them "at their own discretion." The top manager could also "secretly control" the American branch.
The regulator demanded a permanent ban on further activities for Binance and CZ, withdrawal of illegally obtained income with interest and financial sanctions.
Representatives of the exchange expressed disappointment with the SEC's decision and expressed their readiness to "strongly defend themselves". The media reported on the similarity of the charges against Binance with the lawsuit against the failed FTX crypto exchange and its subsidiary Alameda Research.
On June 8, the American platform removed 10 trading pairs in conjunction with bitcoin and its own stablecoin BUSD, and also suspended over-the-counter trading.
June 9 Binance.US announced the suspension of dollar deposits at the request of the SEC and recommended that customers urgently withdraw fiat funds.
Massive sales on the platform created a discount on bitcoin and other assets. Digital gold paired with the US dollar was trading at a more than 7% discount relative to its value in USDT. Market depth for 25 leading cryptocurrencies on Binance.US decreased by 78%.
The court ordered the parties to find a compromise to ensure the protection of client assets with the possibility of continuing the operation of the platform.
On June 17, the regulator reached an agreement with Binance.US on restricting access of employees of the parent platform to the funds of users of the American division.
After the court's approval, the SEC's request to freeze assets was withdrawn. As part of the agreements, the platform provided information to the agency about business expenses.
Binance representatives.The US unfrozen the withdrawal, but warned of the risks of a repeat of the situation in the "near future". The platform also announced the delisting of cryptocurrencies paired with the US dollar, with the exception of BTC, ETH, ADA, BNB, LTC, MATIC, SOL, VET, USDC and USDT.
Amid the US proceedings, the exchange began to have problems in other jurisdictions, including Cyprus, the Netherlands, France, the United Kingdom, Brazil, Belgium, Austria, Germany, Nigeria and Australia.
July
On July 6, Fortune reported that Binance's Chief Strategy Officer, Patrick Hillmann, Senior Vice President of Regulatory compliance, Stephen Christie, and General Counsel, Han Ng, were leaving due to an investigation by the US Department of Justice.
CZ confirmed the change of leadership, but noted that the reasons given by the press are "completely incorrect". He explained what was happening with the usual staff turnover.
On July 17, The Wall Street Journal reported that over 1,000 Binance employees were being laid off. Later it became known about the reduction of benefits for employees.
On July 24, the WSJ published an article about Binance's overstated trading volumes.US during startup. According to journalists, in 2019, in the first hour, the bitcoin turnover on the platform exceeded $70,000.
According to internal correspondence, Binance used the services of third-party trading firms, one of which — Sigma Chain-was a market maker and belonged to Zhao himself.
The authors said that such a situation can signal "fictitious trading", so it is difficult for regulators to assess the depth of the market.
August
On August 2, Semafor, citing its own sources, reported that the US Department of Justice is preparing to charge Binance with fraud, but is concerned about the possible outflow of users.
According to officials, the lawsuit could lead to a massive withdrawal of funds, causing customers to lose money and could trigger a panic in the digital asset market.
At that time, prosecutors considered other options for restrictions against the company, such as fines and agreements on postponement or refusal of prosecution.
On August 15, the American "daughter" of Binance sent a petition to restrict SEC requests to the bitcoin exchange. The company pointed out that the regulator's requirements for providing information were "excessively broad" and "unnecessarily burdensome."
On August 22, the WSJ wrote about the investigation of the US Department of Justice against Binance in connection with a possible violation of US sanctions against Russia. Against this background, the exchange's P2P platform has replaced the names of Russian bank cards "Sber" and "Tinkoff" with "green" and "yellow", respectively.
The company began to consider a complete withdrawal from the Russian Federation, but later called such a scenario unlikely.
Due to regulatory problems, Mastercard and Visa companies refused to issue cryptocurrency payment cards for Binance.
At the end of the month, the SEC filed a sealed motion as part of the lawsuit against the exchange, containing 35 pieces of physical evidence, a statement from the agency's trial lawyer and a proposed order.
In addition, Binance announced that it will stop supporting its own BUSD stablecoin in 2024. The decision was made after the NYDFS investigation into the issuer of the Paxos coin and the subsequent order to stop its release.
September
On September 1, CZ stated that despite numerous regulatory checks, the exchange has proven to be reliable, maintaining a large user base and market share.
On September 6, top managers of the Russian direction-Gleb Kostarev, Director for Eastern Europe, and Vladimir Smerkis, Director for CIS — left the company. Zhao explained the situation by moving employees to higher positions or to new projects.
On September 12, it became known about the resignation of the CEO Binance.US By Brian Schroeder. His departure occurred in parallel with the dismissal of another 100 employees of the American branch.
Krishna Juvwadi, Head of the Legal Department, and Sidney Majala, Head of the Risk Department, also left the company.
On September 14, the SEC charged Binance.US in the unwillingness to cooperate in the disclosure of information. According to the agency, the holding company of the exchange-BAM-delayed the preparation of the requested documents.
The court refused to oblige the exchange to provide the agency with expanded information regarding the processing of client assets and called on the parties to work together.
September 22 Binance, Binance.US and CZ filed petitions to dismiss the Commission's claims, noting the regulator's" implausible " arguments. One of the documents says that the agency gave too broad a definition of the term "investment contract".
Kaiko analysts noted the company's vulnerable position due to regulatory pressure. If after the collapse of FTX, the platform processed 70% of all transactions on the crypto market, then by the end of September, the indicator fell to 50%.
On September 27, Binance announced its withdrawal from Russia and the transfer of its business to CommEX.
October
The second month of autumn turned out to be relatively calm on regulatory issues for Binance. However, the platform continued to record a deterioration in performance — the share of spot trading on the exchange in September fell to 34.3%. For comparison: at the beginning of the year, the indicator was 55.2%.
On October 17, the media learned about the withdrawal of FDIC insurance for customer deposits Binance.US.
According to the Bloomberg billionaire rating, CZ's net worth fell by 82% — from a peak of $96.6 billion in January 2022 to $17.3 billion.
November
On November 8, the SEC said that Binance's attempts to dismiss the agency's claim have no legal basis, and called the claim "absurd."
On November 21, in a deal with the US Department of Justice, Binance agreed to pay fines totaling $4.3 billion amid an ongoing investigation by the department and the SEC against the exchange and CZ.
The agreement involves bringing charges against the head of the exchange in money laundering, financial fraud and violation of sanctions. Zhao agreed to step down as CEO after pleading guilty to alleged government violations. He personally has to pay $50 million in fines.
Under the agreement with FinCEN, the crypto exchange will implement a "full exit" from the United States and appoint an observer for a period of five years, who will monitor the internal program for compliance with sanctions.
CZ also posted a $175 million bail to remain free. Sentencing is scheduled for February 23, 2024.
The new head of Binance will be head of regional markets Richard Teng.
Recall that Matrixport analysts concluded that Binance will remain among the largest crypto exchanges in the next two to three years, since agreements with US agencies are a favorable outcome.
June
On June 5, the SEC sued Binance and CZ, bringing 13 charges, including unregistered offers and sales of BNB and BUSD tokens, Simple Earn and BNB Vault products, and staking.
The Commission claimed that the company failed to register its platform Binance.com as an exchange, broker-dealer, or clearing agency, just like the US division — Binance.US.
In addition, the SEC has qualified SOL, ADA, MATIC, FIL, ATOM, SAND, MANA, ALGO and AXS tokens as securities.
According to the agency's lawsuit, Zhao and his company allegedly controlled the assets of clients, mixed and redirected them "at their own discretion." The top manager could also "secretly control" the American branch.
The regulator demanded a permanent ban on further activities for Binance and CZ, withdrawal of illegally obtained income with interest and financial sanctions.
Representatives of the exchange expressed disappointment with the SEC's decision and expressed their readiness to "strongly defend themselves". The media reported on the similarity of the charges against Binance with the lawsuit against the failed FTX crypto exchange and its subsidiary Alameda Research.
On June 8, the American platform removed 10 trading pairs in conjunction with bitcoin and its own stablecoin BUSD, and also suspended over-the-counter trading.
June 9 Binance.US announced the suspension of dollar deposits at the request of the SEC and recommended that customers urgently withdraw fiat funds.
Massive sales on the platform created a discount on bitcoin and other assets. Digital gold paired with the US dollar was trading at a more than 7% discount relative to its value in USDT. Market depth for 25 leading cryptocurrencies on Binance.US decreased by 78%.
The court ordered the parties to find a compromise to ensure the protection of client assets with the possibility of continuing the operation of the platform.
On June 17, the regulator reached an agreement with Binance.US on restricting access of employees of the parent platform to the funds of users of the American division.
After the court's approval, the SEC's request to freeze assets was withdrawn. As part of the agreements, the platform provided information to the agency about business expenses.
Binance representatives.The US unfrozen the withdrawal, but warned of the risks of a repeat of the situation in the "near future". The platform also announced the delisting of cryptocurrencies paired with the US dollar, with the exception of BTC, ETH, ADA, BNB, LTC, MATIC, SOL, VET, USDC and USDT.
Amid the US proceedings, the exchange began to have problems in other jurisdictions, including Cyprus, the Netherlands, France, the United Kingdom, Brazil, Belgium, Austria, Germany, Nigeria and Australia.
July
On July 6, Fortune reported that Binance's Chief Strategy Officer, Patrick Hillmann, Senior Vice President of Regulatory compliance, Stephen Christie, and General Counsel, Han Ng, were leaving due to an investigation by the US Department of Justice.
CZ confirmed the change of leadership, but noted that the reasons given by the press are "completely incorrect". He explained what was happening with the usual staff turnover.
On July 17, The Wall Street Journal reported that over 1,000 Binance employees were being laid off. Later it became known about the reduction of benefits for employees.
On July 24, the WSJ published an article about Binance's overstated trading volumes.US during startup. According to journalists, in 2019, in the first hour, the bitcoin turnover on the platform exceeded $70,000.
According to internal correspondence, Binance used the services of third-party trading firms, one of which — Sigma Chain-was a market maker and belonged to Zhao himself.
The authors said that such a situation can signal "fictitious trading", so it is difficult for regulators to assess the depth of the market.
August
On August 2, Semafor, citing its own sources, reported that the US Department of Justice is preparing to charge Binance with fraud, but is concerned about the possible outflow of users.
According to officials, the lawsuit could lead to a massive withdrawal of funds, causing customers to lose money and could trigger a panic in the digital asset market.
At that time, prosecutors considered other options for restrictions against the company, such as fines and agreements on postponement or refusal of prosecution.
On August 15, the American "daughter" of Binance sent a petition to restrict SEC requests to the bitcoin exchange. The company pointed out that the regulator's requirements for providing information were "excessively broad" and "unnecessarily burdensome."
On August 22, the WSJ wrote about the investigation of the US Department of Justice against Binance in connection with a possible violation of US sanctions against Russia. Against this background, the exchange's P2P platform has replaced the names of Russian bank cards "Sber" and "Tinkoff" with "green" and "yellow", respectively.
The company began to consider a complete withdrawal from the Russian Federation, but later called such a scenario unlikely.
Due to regulatory problems, Mastercard and Visa companies refused to issue cryptocurrency payment cards for Binance.
At the end of the month, the SEC filed a sealed motion as part of the lawsuit against the exchange, containing 35 pieces of physical evidence, a statement from the agency's trial lawyer and a proposed order.
In addition, Binance announced that it will stop supporting its own BUSD stablecoin in 2024. The decision was made after the NYDFS investigation into the issuer of the Paxos coin and the subsequent order to stop its release.
September
On September 1, CZ stated that despite numerous regulatory checks, the exchange has proven to be reliable, maintaining a large user base and market share.
On September 6, top managers of the Russian direction-Gleb Kostarev, Director for Eastern Europe, and Vladimir Smerkis, Director for CIS — left the company. Zhao explained the situation by moving employees to higher positions or to new projects.
On September 12, it became known about the resignation of the CEO Binance.US By Brian Schroeder. His departure occurred in parallel with the dismissal of another 100 employees of the American branch.
Krishna Juvwadi, Head of the Legal Department, and Sidney Majala, Head of the Risk Department, also left the company.
On September 14, the SEC charged Binance.US in the unwillingness to cooperate in the disclosure of information. According to the agency, the holding company of the exchange-BAM-delayed the preparation of the requested documents.
The court refused to oblige the exchange to provide the agency with expanded information regarding the processing of client assets and called on the parties to work together.
September 22 Binance, Binance.US and CZ filed petitions to dismiss the Commission's claims, noting the regulator's" implausible " arguments. One of the documents says that the agency gave too broad a definition of the term "investment contract".
Kaiko analysts noted the company's vulnerable position due to regulatory pressure. If after the collapse of FTX, the platform processed 70% of all transactions on the crypto market, then by the end of September, the indicator fell to 50%.
On September 27, Binance announced its withdrawal from Russia and the transfer of its business to CommEX.
October
The second month of autumn turned out to be relatively calm on regulatory issues for Binance. However, the platform continued to record a deterioration in performance — the share of spot trading on the exchange in September fell to 34.3%. For comparison: at the beginning of the year, the indicator was 55.2%.
On October 17, the media learned about the withdrawal of FDIC insurance for customer deposits Binance.US.
According to the Bloomberg billionaire rating, CZ's net worth fell by 82% — from a peak of $96.6 billion in January 2022 to $17.3 billion.
November
On November 8, the SEC said that Binance's attempts to dismiss the agency's claim have no legal basis, and called the claim "absurd."
On November 21, in a deal with the US Department of Justice, Binance agreed to pay fines totaling $4.3 billion amid an ongoing investigation by the department and the SEC against the exchange and CZ.
The agreement involves bringing charges against the head of the exchange in money laundering, financial fraud and violation of sanctions. Zhao agreed to step down as CEO after pleading guilty to alleged government violations. He personally has to pay $50 million in fines.
Under the agreement with FinCEN, the crypto exchange will implement a "full exit" from the United States and appoint an observer for a period of five years, who will monitor the internal program for compliance with sanctions.
CZ also posted a $175 million bail to remain free. Sentencing is scheduled for February 23, 2024.
The new head of Binance will be head of regional markets Richard Teng.
Recall that Matrixport analysts concluded that Binance will remain among the largest crypto exchanges in the next two to three years, since agreements with US agencies are a favorable outcome.