The Downfall of Binance: A Cautionary Tale in Crypto
Written on
Chapter 1: Unveiling Binance's True Nature
In 2023, the former CEO of Binance, Changpeng Zhao, openly mocked critics regarding the company's alleged misconduct. I have the evidence to back this up!
As another major player in the centralized cryptocurrency arena reveals their true self, it becomes evident that Binance was engaging in more than just questionable practices. The company's CEO, CZ, resigned while admitting, “I make mistakes and must take responsibility,” as Binance faced an astronomical fine of $4.3 billion. But what led to this fallout? Let's delve into the details.
Section 1.1: Legal Challenges Emerge
Earlier this year, several U.S. regulatory bodies, including the CFTC and SEC, took legal action against Binance, coinciding with similar lawsuits against Crypto.com. Initially, these seemed like another exercise of SEC authority amid their intensified scrutiny of the crypto sector. However, the situation appeared more serious than anticipated.
The SEC filed 13 charges against Binance, while Crypto.com faced relatively minor allegations related to unregulated securities. This disparity should have raised alarms. Under Gary Gensler's leadership, the SEC seemed determined to use litigation as a means to enforce compliance, reminiscent of their approach towards Ripple. Gensler’s comments in interviews suggested a firm stance: “Every cryptocurrency except Bitcoin is a security” and “they are blatantly breaking the law.”
Gensler may have inadvertently validated an old Swedish proverb, proving that even the most unlikely sources can uncover the truth. So, kudos to him. removes hat
This culminated in Binance incurring a $4.3 billion fine, with Changpeng Zhao pleading guilty to the allegations—indicating he was well aware of the unfolding events. More importantly, did he hint at the dubious activities all along?
Section 1.2: The Mockery
Changpeng Zhao, who began 2023 with a tweet outlining his four New Year resolutions, seemed to disregard their relevance, particularly the fourth one. The resolutions included: “Will try to keep 2023 simple. Spend more time on fewer things. Do’s and Don’ts: 1. Education 2. Compliance 3. Product & Service 4. Ignore FUD, fake news, attacks, etc.” He requested that future references to his tweet about “4” be linked to this post.
This meant throughout 2023, Changpeng would respond to criticisms he deemed FUD (fear, uncertainty, and doubt) with similar rhetoric. While I’m not active on Twitter, I noticed parallels between Changpeng and Alex Mashinsky, who similarly dismissed negative scrutiny as FUD, encouraging everyone to disregard it. It seemed they both attended the same course on evasion.
Another intriguing aspect of Changpeng’s resolution tweet is its structure. It lists four items, suggesting there is at least one “don’t” among them. With the first three primarily positive, it implies they are actions he should take, leaving “Ignore FUD, fake news, attacks, etc.” as the only item to avoid. Was Changpeng cheeky enough to imply that there were truths behind the allegations against Binance by suggesting we shouldn't ignore FUD? Or was he merely playing with our expectations?
This twist suggests he may not adhere to the first three points and instead choose to ignore legitimate questions. Thus, every tweet where he holds up four fingers or simply posts “4” might be interpreted as a taunt, saying, “Look what I’m getting away with; you’re just too oblivious to see it. I even hinted that you shouldn’t dismiss the FUD.”
Chapter 2: The Broader Implications
For a comprehensive overview of the situation and some notable red flags, I suggest watching Coffeezilla's video on the matter or reading the extensive articles by Reuters regarding Binance.
The recurring issues with FTX and now Binance only serve to arm those opposed to cryptocurrency with more reasons to criticize. Is it too much to hope for a company that operates without cutting corners or facilitating illicit activities in 2023? I genuinely wish for severe consequences for those involved and hope we won't encounter such figures in the crypto landscape again.
Despite the ongoing turmoil, Binance has not yet experienced a bank run, suggesting they may barely survive after the hefty fine. However, if they were to collapse alongside FTX, it would severely damage the crypto industry's reputation and hinder adoption rates, giving central bank digital currencies (CBDCs) more room to gain traction.
This piece has shifted from its original intention of a thorough examination of Binance to a more entertaining narrative. Given the deluge of negative news, I thought a lighter tone was warranted, which I hope you appreciated. What do you think about Binance's predicament? Are they really caught in the cookie jar, or is this just the beginning of a larger downfall?
If you enjoy my content and would like to support me, consider following my work or exploring my other posts.
Daniel Jensen - Medium
Read my writings on Medium, where I share insights on cryptocurrency and finance.
See you online!