The price of bitcoin fell sharply on Wednesday after Changpeng “CZ” Zhao, CEO of Binance, resigned from the world’s largest crypto exchange and pleaded guilty to multiple criminal charges from the Department of Justice.
This caused BNB, Binance‘s native token, to plummet nearly 11%, with Binance now facing a fine of over $4 billion for violating several U.S. anti-money laundering laws and circumventing financial regulations.
Bitcoin fell nearly 5% to $35,714 – erasing much of its gains of the past two weeks, while the world’s No. 2 crypto Ethereum sank 4.5%.
CZ pleaded guilty in a Seattle court on Tuesday and announced his resignation on social media platform X. Richard Teng, former head of Abu Dhabi’s financial authority and current head of Binance’s regional markets, will take his place as CEO.
CZ is now banned from any involvement with Binance, faces a personal fine of $50 million and could potentially face jail time.
His resignation, along with Binance’s settlement, ends a years-long investigation into the world’s largest crypto exchange for allegedly facilitating money laundering activities, particularly for entities under U.S. sanctions. The DOJ, along with a series of investigative reports by Reuters, had alleged that Binance knowingly skirted regulations and even encouraged its users to circumvent government restrictions on the exchange.
The settlement also deals another blow to the credibility of the crypto industry, coming just weeks after FTX founder Sam Bankman-Fried was found guilty of committing fraud and misusing customer funds at the now-defunct crypto exchange.
The crypto industry has suffered a severe loss of confidence over the past year, which was marked by several high-profile bankruptcies. This was followed by several apparent poster children for the industry – including Bankman-Fried and CZ – facing allegations of criminal activity on their respective exchanges.
Recently, the Securities and Exchange Commission brought similar charges against crypto exchange Kraken, alleging that it commingled customer funds. The regulator also has ongoing cases against other crypto players, most notably Gemini, which is owned by Cameron and Tyler Winklevoss, and Coinbase Global Inc (NASDAQ:COIN), the largest crypto exchange in the US.
Bitcoin’s trading volume plummeted last year as retail traders exited the space, and it now trades at a fraction of its 2021 highs.
But the token has seen some renewed interest in recent weeks, amid growing speculation that the SEC is close to approving an exchange-traded fund that directly tracks the price of bitcoin.
But the regulator has given no such signals, and has regularly rejected applications for a spot bitcoin ETF on the grounds that the currency is prone to price manipulation.
