It seems that the misery continues to add for the cryptocurrency industry. In the latest turn of events, Changpeng Zhao (CZ), co-founder, Binance, a global cryptocurrency exchange, resigned from his position as the exchange’s CEO after confessing to money laundering charges over infringement of the Bank Secrecy Act. From what it’s understood, CZ and Binance were subjected to years-long scrutiny by the United States Department of Justice (DOJ). “I believe Zhao’s departure marks a turning point for the global crypto landscape, signalling a shift towards transparency and regulatory compliance. As the largest offshore digital assets exchange, Binance has been at the centre of regulatory scrutiny in the US and other jurisdictions. This move seems to be a development for the industry, as it demonstrates that even influential players are not above the law,” Manhar Garegrat, country head – India and global partnerships, Liminal, a wallet infrastructure and custody solutions platform, told FE TransformX.
With investors drawing out roughly $956 million from Binance, according to Reuters, experts believe that more questions are being left unanswered. Upon developments around CZ being subjected to a $4.3 billion settlement, cryptocurrency prices seemingly went for a toss. According to CoinMarketCap, a cryptocurrency price-tracking website, BNB token, Binance’s cryptocurrency, sustained a 7.2% fall in its value on account of the update. Data provided by media reports showed that the development took a toll on other cryptocurrencies, such as Bitcoin (BTC) witnessing a 1.53% drop in value, ranging near to $37,000, and Ether (ETH) falling by 2.1% to $1,992.43. The reports also mentioned that other cryptocurrencies such as Solana were down by over four percent, Ripple’s XRP fell by 3.2%, while Uniswap and Polygon dropped by 3.8% and 7.8% respectively. Despite the drawbacks, an article published by Cointelegraph, a cryptocurrency-oriented publication, has expressed optimism as BTC derivatives’ traders expect the cryptocurrency to hit $40,000 upon conclusion of the Binance conundrum.
“As blockchain gains mainstream adoption, regulatory scrutiny should intensify. Platforms seem to be navigating the balance between innovation and compliance, leading to shifts and changes in leadership. This should be viewed as a positive sign that the industry is maturing and adapting to a regulated environment. These adjustments are considered essential for long-term sustainability and to foster trust among operators, users, investors, and regulators alike,” Shrikant Bhalerao, founder and CEO, Seracle, a blockchain technology company, highlighted.
As per market reports, this Binance development has arrived at an unprecedented period, considering the presence of regulatory concerns in Europe and the US. Previously, Binance discontinued its operations in Cyprus and the Netherlands due to regulatory drawbacks and is believed to be probed by France over money laundering. It’s believed that Binance has also been subjected to investigation over US sanctions on Russia, which resulted in the selling of Binance’s Russian unit CommEX in September, 2023. Furthermore, charges were filed against Binance by the Commodity Futures Trading Commission (CFTC) and Securities and Exchange (SEC) at the earlier stages of this year. However, market-based research has shown that despite the implications, this move should set the stage for global regulations for cryptocurrency exchanges, such as Binance, to keep themselves in operation based on investors’ trust. Through a post on X, formerly Twitter, Mike Novogratz, CEO, Galaxy Digital, a digital asset and blockchain company, specified that Binance’s settlement with US regulators can turn out to be a bullish move. “Not sure if reports are true but I personally am hoping for a settlement and for the industry to move forward,” Novogratz added.
“Looking ahead, factors are expected to drive crypto adoption, particularly in India. These should include the upcoming elections in India and the US, the Bitcoin halving event, the potential for a Bitcoin ETF in the US, and the emergence of startups addressing crypto adoption challenges in India. The crypto market seems to have matured since its inception. I think the crypto industry is poised for growth and success with compliance, solutions, and a growing adoption rate,” Avinash Shekhar, founder, TaxNodes, a crypto taxation platform, concluded.