- Changpeng Zhao, the founder of Binance, has been permanently banned from managing the cryptocurrency exchange due to regulatory violations.
- Zhao stepped down as CEO in a deal with US authorities and is currently serving a prison sentence while also paying a $50 million fine.
Changpeng Zhao, the founder and former CEO of Binance, has been permanently barred from managing the cryptocurrency exchange. At first, Zhao said that he would be taking a temporary leave of absence from Binance, but Axios later said that he would never be coming back to the company in a leadership position. This is in accordance with undertakings made with US authorities after US regulators accused Zhao and Binance of regulatory breaches.
Zhao faced legal issues, especially in the US after the regulators accused him of selling unregistered securities, market manipulation, and the lack of adequate measures to stop money laundering. This is because other giants such as Binance, which claims to be the world’s largest cryptocurrency exchange, have not been left behind by the regulators, and that is why this severe legal process has struck its founder.
Zhao Resigns as CEO and Reaches Settlement with DOJ
In November, Zhao resigned from his position as the CEO of Binance after coming to an agreement with the US Department of Justice (DOJ). In the settlement, Zhao was barred from playing any part in the management or operations of Binance going forward. This decision is a major change in the organizational structure of the company’s management.
During his court appearance, Zhao took responsibility for his failure to ensure the exchange met AML compliance standards, admitting the gravity of the issue.
After the resignation of Zhao, Richard Teng became the new CEO of Binance. In a statement, Teng confirmed that the lifetime ban on Zhao managing Binance was one of the key conditions of the settlement with the US authorities. Zhao will further continue to exert control over Binance operations since he is the largest majority shareholder of the company.
Despite being barred from assuming executive positions, Zhao can still call for management changes and can even select new members of the board. Binance has grown its governance structure after Zhao’s exit with the current board having seven members which is a stark contrast to when Zhao was the only director. In the settlement, the DOJ will also appoint two external agents to oversee compliance with the agreement, and Zhao will be prohibited from participating in the management of Binance.
Zhao Shifts Focus to Venture Capital in Emerging Technologies
Although Zhao is banned from Binance, he continues to have hope for the future. He has stated that he has no plans to serve as an executive in any other company. However, Zhao has decided to shift his attention to venture capital in new areas such as blockchain, AI, and biotechnology. These sectors are to be his new focus after stepping down from his position in the cryptocurrency exchange.
Apart from resigning from Binance, Zhao is currently behind bars in the United States. He started serving his sentence at the Federal Correctional Institution, Lompoc, California in July. The federal prosecutors had asked for a three-year sentence and Zhao was given a lighter sentence. The defense lawyers had argued for probation for five months, while the court’s sentencing options suggested that the defendant should be imprisoned for 12 to 18 months.
