Why Binance Is Collapsing ?

Changpeng Zhao, popularly known as CZ, led Binance to become the world's largest cryptocurrency exchange with a staggering $65 billion fortune in 2021. Binance's trading volume surpassed that of the four largest exchanges combined, boasting approximately 128 million users globally and a daily trading volume of $8.3 billion. However, the promising trajectory took an unexpected turn, leading to the Binance collapse and a series of legal challenges.

Regulatory issues began haunting Binance early on, starting with the Chinese government's ban on cryptocurrency exchanges in 2017. Relocating to Japan didn't alleviate the regulatory pressure, prompting another move. The lack of a stable base complicated operations, particularly in the U.S., where a significant user base existed. To comply with U.S. regulations, Binance launched Binance US in 2019, seemingly operating independently. However, behind the scenes, CZ maintained a subset of high-value users on the original platform, circumventing regulations.

The Department of Justice (DOJ) revealed that Binance facilitated money laundering and allowed exceptions for VIPs, even when dealing with funds from illicit sources like Hydra, a darknet marketplace. Despite these issues, Binance's popularity surged, attracting millions of users monthly.

The SEC and DOJ investigations intensified in 2020, leading to subpoenas. By 2021, CZ's fortune reached nearly $100 billion. However, a series of events unfolded in 2023, including CZ's resignation, the collapse of FTX and other firms, and legal troubles. The CFTC sued Binance in March, alleging illegal operations in the U.S. In May, Binance exited Canada due to regulatory changes, and in June, the SEC filed a lawsuit against CZ, claiming undisclosed control over Binance US.

As investigations expanded globally, Binance withdrew from various markets. Layoffs and executive departures followed in July, and in November, the company agreed to pay a record $4.3 billion fine, pleading guilty to criminal charges. CZ stepped down as CEO, emphasizing user fund security. Richard Tang took over as CEO, and Binance expressed a commitment to learn and grow from the challenging chapter.

The impact of these developments on the cryptocurrency market remains uncertain, as Binance, despite its challenges, retains its position as a major player. The $4.3 billion fine marks one of the largest in U.S. corporate history, highlighting the regulatory complexities faced by even the largest cryptocurrency exchanges.


CHAPTERS:
0:00 Changpeng Zhao Binance CEO
1:48 The Beginning Of Binance
3:35 Binance U.S. Launch
6:22 Binance Investigated
6:57 Binance Is Sued
8:00 Binance And CZ Pleads Guilty
8:55 The Future Of Binance

Produced by: Samantha Harvey
Edited by: Jacob Smith
Animation: Charlotte Brown

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