Description of $4.3 billion Binance transaction

You’ve probably read the headlines about the $4.3 billion fine that Binance, the world’s largest cryptocurrency exchange, agreed to pay to the U.S. government.

In my opinion it’s worth every penny.

With this fine, Binance essentially bought its freedom. Binance is now legal.

I haven’t read a single article that clearly explains what this deal means for cryptocurrency users, especially Binance Token (BNB) investors. (Full disclosure: I am an investor.)

Here’s what happened and what it means for the coming cryptocurrency era.

A brief history of Binance

Binance was founded in 2017, during the heyday of cryptocurrency. Initial coin offerings, where an entrepreneur sets up a new cryptocurrency company, raises funds by issuing new tokens (much like issuing shares in an IPO) and then uses the proceeds to build the company, have been all the rage.

Bitcoin is hitting record highs, new tokens are being released every day, and a new class of “crypto traders” has emerged to provide liquidity between all digital assets. That meant buying, selling and sometimes holding for the long term.

Changpeng (“CZ”) Zhao, a trading software developer at the Tokyo Stock Exchange, launched Binance amidst this chaos. Binance allows users to buy, sell, and trade all major cryptocurrencies, and Binance earns a portion of revenue from each transaction.

It was a machine that printed money.

At first, both people were attracted to it because it was easy to open an account without showing any identification. just customers (millions) and illegal Customers (sometimes money launderers, ransomware fraudsters, and terrorist financiers)

When Binance Mistakes in Not Implementing More Rigorous Customer Screening: As the Department of Justice has documented, CZ prioritized the company’s growth over legal compliance.

The company helped its “VIP clients” (crypto whales who move a lot of money and generate huge profits) even when their behavior seemed sketchy. And Binance seemed to be aware that money was flowing illicitly between the United States and sanctioned countries like Iran.

In CZ’s defense, the company spun off a subsidiary called Binance.US in 2019 to block US users from the Binance.com platform and redirect them to Binance.US instead. The idea was that Binance.US would comply with stricter US regulations.

According to the Department of Justice (DOJ), the problem was that the bad behavior continued because US users could still use Binance.com through VPN or proxy tools. And Binance knew it.

Meanwhile, CZ considered it important to establish Binance in a kind of no-man’s land, eliminating physical headquarters and constantly moving. He asked employees to use encrypted messaging services to ensure there was no paper trail.

As the U.S. government began to heat up in 2021, CZ resisted, but the threat of a massive lawsuit eventually changed his mind. He had just seen how FTX’s operations took a toll on the company and landed Sam Bankman-Fried in jail. (In fact, he helped bring about the collapse and burning of FTX.)

An FTX-style trial could scare customers and withdraw all their funds. will be Be the end of Binance. (It was also in the government’s best interest to fix it. Remember how the contagion from the FTX collapse spread to traditional banks as well.)

So Binance and the US government reached an agreement.

transaction, description

In plain English: US customers cannot trade on Binance.comThis time, the government will appoint compliance monitors to audit and ensure that Binance is functioning properly.

US customers can still use Binance.US. (If you are reading this from the United States, you can try Binance.com and Binance.US for yourself). Of course, Binance.US will monitor compliance more closely, which will be a good thing for its customers.

CZ will step down as CEO and be succeeded by Richard Teng., former CEO of the Abu Dhabi Financial Services Regulatory Authority. CZ is giving up voting rights but still retains ownership of Binance.

And that comes with a pesky $4.3 billion fine.. ($4,316,126,163, to be exact.) Binance claims to have secured up to $8 billion for final settlement, so it looks like they’re saving for a rainy day.

News outlets keep saying that Binance is “completely withdrawing” from the US, which is not accurate. US customers are some of Binance’s most valuable customers. This is critical to the long-term growth of the company.

Surely, US users cannot use Binance.com, but Binance.US is still available.. It’s the same since 2019, better compliance is now possible. But saying “everything stays the same at Binance” doesn’t make a good headline.

Investor Implications

I am very optimistic about this situation.

I believe Binance is completely wrong in helping criminals evade control because we do not tolerate breaking the law. Once you build a corporate culture outside the bounds of the law, it’s difficult to remove it from the system. That’s what I’m worried about.

Meanwhile, I learned a lesson from watching the growth of Uber, led by founder Travis Kalanick. Here’s another disruptive technology company entering a highly regulated market. Taxis were terrible back then and Uber truly offered a better customer experience. Under Kalanick, Uber took a hard line to capture new markets, often avoiding or ignoring the law.

We should all feel conflicted about this moral dilemma. Is it right or wrong for an enterprising entrepreneur to aggressively promote a better product, even if it means breaking laws that may be outdated or unfair?

In the case of Uber, the taxi industry was disrupted, Uber was a much superior product, and society benefited as a result. (In fact, I took a NYC taxi a while ago and was amazed at how much better the taxi experience has become. It’s a lot like taking an Uber.)

Binance offers great products and services legitimately. One of the most user-friendly and trustworthy cryptocurrency exchanges in the world. Keep your funds safe. We are continuously innovating, from high-yield staking products to our own blockchain. It even has its own charity.

Could the company have succeeded if it had waited for U.S. regulators to catch up? The SEC still can’t even define whether a token is a security. If you want to see the results of a ‘wait and see’ approach, Take a look at American banks. There is no cryptocurrency innovation.

I believe this agreement is a political victory for the DOJ, a positive relationship for Binance with the government, and a move forward for the industry as a whole.

This is why I am very happy about Binance’s $4.3 billion fine. The company can afford it and there is now an understanding. The US government will monitor Binance and appoint an adult CEO, and Binance is now legal.

(Uber ultimately ousted Travis Kalanick and brought in Dara Khosrowshahi as a mature CEO. The company launched an IPO and its stock price is now near all-time highs.)

Let me repeat four important words: Binance is now legal. This is a huge deal. Every penny of that $4.3 billion is worth it.

my faith Investing in BNB tokens is the same as investing in Binance. Now that Binance has “government approval,” we believe the company will not only survive, but thrive. They have a great product, a huge competitive moat, and are now officially regulated.

For my money, BNB is a better buy than ever.

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