Tuesday
marks
the
end
of
an
era.
Binance’s
Changpeng
Zhao
stepped
down
and
pleaded
guilty
to
violating
U.S.
anti-money
laundering
requirements,
despite
the
fact
that
Binance
was
never
a
U.S.
exchange.
With
that,
the
myth
of
“borderless”
crypto
companies
is
truly
over.
To
be
sure,
this
is
not
the
first
time
that
U.S.
law
enforcement
nailed
a
crypto
exchange
that
was
not
officially
in
the
country.
The
same
thing
happened
with
FTX.
But
no
company
exemplified
the
“borderless”
myth
more
than
Binance,
which
will
also
pay
a
$4.3
billion
dollar
fine
to
settle
an
investigation
from
the
United
States
Department
of
Justice.
Binance
defied
the
boundaries
of
a
traditional
company.
It
served
traders
everywhere,
eventually
becoming
the
world’s
largest
cryptocurrency
exchange,
and
yet
for
a
long
time
no
one
seemed
to
know
where
it
was
located.
The
very
idea
of
a
headquarters
was
antithetical
to
Binance’s
whole
identity.
In
2018,
I
asked
CZ
where
he
was
based.
“People
still
have
this
really
strong
concept
of
where
your
company
is,
and
where
you
are,”
he
told
me
at
the
time.
“A
company
is
a
concept.
An
organization
is
a
concept.”
When
I
asked
where
he
called
home,
he
just
said,
“I
don’t
really
have
any
answer
to
that.
Earth?”
Binance
made
a
point
of
not
being
based
in
the
United
States,
outside
of
its
much
smaller
US
entity,
Binance.US.
I
can’t
remember
the
last
time
CZ
publicly
appeared
on
American
soil.
But
the
company
was
clearly
not
exempt
from
U.S.
law.
The
United
States
accused
Binance
of
not
having
a
proper
anti-money
laundering
program,
of
operating
an
unlicensed
money-transmitting
business
and
of
violating
sanctions
law,
CoinDesk
reported.
“Binance
became
the
world’s
largest
cryptocurrency
exchange
in
part
because
of
the
crimes
it
committed
—
now
it’s
paying
one
of
the
largest
corporate
penalties
in
U.S.
history,”
Attorney
General
Merrick
Garland
said.
The
SEC
and
the
CFTC
have
also
taken
enforcement
actions
against
Binance.
The
overall
theme
of
the
allegations
is
that
Binance
had
U.S.
customers,
told
those
customers
how
to
avoid
U.S.
regulations
and
took
steps
to
hide
their
activity
from
U.S.
regulators.
Some
in
the
crypto
community
criticize
the
long
arm
of
U.S.
law.
Binance
itself
pushed
back
against
the
CFTC
in
a
filing
in
a
U.S.
court,
saying,
“U.S.
law
governs
domestically
but
does
not
control
the
world.”
U.S.
law
might
disagree.
In
2022,
BitMEX
Founders
pled
guilty
to
violating
U.S,
anti-money
laundering
laws,
even
though
BitMEX
was
based
in
the
Seychelles.
And
then,
of
course,
came
FTX.
FTX
was
based
in
Hong
Kong
and
then
moved
to
the
Bahamas.
Sam
Bankman-Fried
desperately
wanted
to
make
it
in
the
United
States,
paying
huge
sums
of
money
for
celebrity
endorsements
and
stadium
naming
rights,
all
while
trying
to
woo
politicians
in
Washington.
In
the
end,
FTX’s
global
operation
never
made
it
into
the
U.S.,
with
the
exception
of
the
much
smaller
and
less
powerful
FTX.US.
Instead,
Bankman-Fried
ended
up
getting
torn
apart
by
U.S.
prosecutors
in
a
U.S.
court.
The
U.S.
still
has
allure
for
crypto
businesses.
Despite
the
pull
of
dynamic
regions
such
as
Asia
or
the
Middle
East,
it’s
hard
to
avoid
the
U.S.
Did
an
overseas
exchange
have
U.S.
users?
Did
it
mislead
U.S.
investors?
Or
did
the
CEO
have
meetings
in
the
United
States?
“The
burden
for
venue
is
not
very
high,”
Samson
Enzer,
a
former
Manhattan
federal
prosecutor,
told
the
WSJ
last
year.
“The
government
would
argue
that
if
a
single
email
went
through
New
York,
that
would
suffice.”
We
probably
will
never
see
another
company
quite
like
Binance.
Crypto
itself
might
be
borderless,
but
crypto
companies
may
find
it
increasingly
hard
to
operate
outside
of
legal
or
geographical
boundaries.
In
the
early
days
of
crypto,
it
seemed
possible
to
launch
a
massive
exchange
that
slipped
through
the
grasp
of
any
jurisdiction.
Those
days
are
gone.