Binance’s
expensive
deal
with
U.S.
prosecutors
this
week
bears
harsh
consequences
but
could
leave
the
world’s
largest
crypto
exchange
with
a
brighter
outlook
going
forward.
After
a
months-long
investigation
by
the
U.S.
Department
of
Justice,
co-founder
and
CEO
Changpeng
“CZ”
Zhao
on
Tuesday
pleaded
guilty
to
violating
federal
crimes
and
Binance
cut
a
check
worth
$4
billion
to
U.S.
lawmakers.
CZ,
who
until
Tuesday
was
one
of
the
most
powerful
people
in
the
crypto
industry,
agreed
to
step
down.
All
this
might
sound
like
a
pretty
bad
outcome
for
the
Hong
Kong-based
exchange,
but
it’s
also
an
opportunity
for
a
fresh
start
–
possibly
the
best-case
scenario
for
Binance,
which
had
been
haunted
by
market
fears
that
U.S.
authorities
might
deal
a
devastating
blow.
“The
settlement
was
the
only
option
to
continue
the
business,”
said
Ethan
Silver,
partner
at
law
firm
Lowenstein
Sandler
who
co-chairs
the
firm’s
crypto
practice.
“Presumably,
they
think
the
business
will
be
able
to
be
cleaned
up
and
operate
on
a
compliant
basis
going
forward
with
a
great
opportunity
to
continue
its
significant
monetization.”
For
years,
industry
participants
had
accused
Binance
of
cutting
corners
on
regulatory
matters
or
of
various
misdeeds,
to
the
point
where
CZ
established
a
way
to
refute
rumors
–
by
posting
the
number
4
on
his
social
media.
He
said
it
stood
for
“Ignore
FUD,”
an
expression
in
the
industry
used
to
describe
when
somebody
spreads
negative
feelings
about
something
–
“fake
news,
attacks,
etc.”
The
company
was
also
routinely
skewered
for
what
seemed
like
an
ever-shifting
account
of
the
location
of
its
corporate
headquarters.
A
criminal
investigation
as
such
could
have
had
fatal
consequences
as
seen
in
the
case
of
collapsed
crypto
exchange
FTX,
which
will
likely
result
in
the
founder
and
former
CEO
Sam
Bankman-Fried
going
to
prison
for
the
rest
of
his
life.
That
episode
sparked
concerns
that
U.S.
charges
against
Binance
might
trigger
a
deposit
run,
a
potentially
difficult-to-reverse
downward
spiral
as
users
scrambled
for
the
exit.
Binance
settlement
So
Binance’s
deal
with
the
DOJ
–
with
no
imminent
signs
of
depositor
flight
or
other
distress
–
might
be
seen
as
a
positive
outcome,
not
just
for
CZ’s
prospects
for
avoiding
a
lengthy
prison
sentence,
but
for
the
exchange’s
business.
(It’s
worth
noting
that
the
exchange
also
remains
under
investigation
by
the
Securities
and
Exchange
Commission
(SEC)
on
allegations
of
violating
federal
securities
laws.)
“Optimistically,
this
can
be
viewed
as
a
removal
of
a
long-standing
overhang
on
the
industry,
one
that
kept
many
investors
at
bay,”
Greg
Cipolaro,
global
head
of
research
at
NYDIG
wrote
in
a
note.
The
change
in
management,
namely
appointing
Richard
Teng,
who
formerly
oversaw
Binance’s
regional
business
operations
outside
the
U.S.,
as
the
new
CEO,
could
help
to
turn
the
page.
Rajeev
Bamra,
head
of
DeFi
and
digital-assets
strategy
at
Moody’s
Investors
Service,
praised
Teng’s
extensive
regulatory
background
and
experience,
in
an
emailed
statement
from
the
credit-rating
firm.
Teng’s
stepping
in
as
the
new
leader
of
the
exchange
could
provide
an
opportunity
to
move
beyond
regulatory
concerns
and
“chart
a
path
towards
stability
and
a
fresh
beginning,”
according
to
Bamra.
In
the
short
term,
Binance
will
likely
lose
some
of
its
market
share
as
a
consequence
of
its
compliance
with
regulators,
Danny
Lim,
core
contributer
at
MarginX,
a
perpetual
decentralized
exchange
(DEX)
said.
Longer
term,
it
could
regain
market
dominance.
BNB
token
price
Binance
has
already
taken
hits
in
popularity
this
year,
and
even
the
market’s
reaction
–
or
lack
thereof
–
shows
that
this
settlement
isn’t
as
big
of
a
deal
in
the
eyes
of
traders.
After
a
flurry
of
trading
over
the
past
couple
days,
the
BNB
(BNB)
token,
closely
associated
with
Binance
and
its
various
sponsored
blockchain
networks,
appears
to
have
stabilized
after
and
initial
sell-off
and
is
now
holding
at
levels
roughly
where
it
has
traded
for
the
past
few
months
–
certainly
no
meltdown.
BNB
has
a
market
capitalization
is
about
$36
billion,
ranking
the
token
as
the
world’s
fourth-biggest
digital
asset.
Most
recently,
Binance
was
surpassed
by
regulated
futures
exchange
Chicago
Mercantile
Exchange
(CME)
as
the
leader
in
open
interest
on
futures
products.
But
that
flip
might
have
been
partly
due
to
the
clouds
from
the
investigation
–
some
of
them
now
lifted.