The largest cryptocurrency exchange in terms of trading volume, Binance, “shaken” under the threat of enforcement action from American authorities. The platform and traders began to prepare for a decline in business and even the collapse of the “Binance empire,” writes the Wall Street Journal.
As an example, the publication cites the activities of the American Binance.US. According to the WSJ, several top managers quit there (including CEO Brian Schroeder), and activity on the exchange “virtually ceased.” A few days before his departure, during a virtual meeting with Binance management, Schroeder said that the US exchange’s revenue had fallen by 70% since the beginning of the year. In addition, according to the company Kaiko, which collects statistics on the cryptocurrency market, Binance now accounts for about 50% of all cryptocurrency purchase and sale transactions. For comparison, at the beginning of the year this share was as much as 70%.
Another “stumbling block” for Binance was an investigation by the US Department of Justice, which suspects the exchange of violating American sanctions against Russia. In particular, the department found out that, despite “compliance with international sanctions”, which Binance announced shortly after the outbreak of hostilities in Ukraine, Russian banks from the “black list” of the West continue to participate in P2P transactions, which allow clients to exchange rubles for digital tokens. According to a knowledgeable WSJ source, the US Department of Justice questioned Binance about cooperation with sanctioned banks, and the exchange’s chief compliance officer, Noah Perlman, met with department representatives to “discuss their concerns.” The publication’s interlocutor added that pressure from the US Department of Justice was “partially” the reason for the curtailment of Binance’s business in Russia. Indeed, a few days after the publication of information about the start of the investigation, the crypto platform first limited foreign exchange transactions for Russians in the P2P trading service, and later announced the possibility of completely leaving the country. At the beginning of September, the director of Binance in Eastern Europe, Gleb Kostarev, and the director in the CIS, Vladimir Smerkis, left the exchange, and today, September 27, it became known about the sale of the Russian business of Binance to CommEX.
In just the past three months, more than a dozen senior executives have left Binance. Brian Schroeder, who left the American subsidiary of the exchange, said in a conversation with employees that Binance co-founder Changpeng Zhao, who is the majority owner of the exchange, needs to resolve “regulatory issues” and sell or transfer his assets to a “blind” trust in order to “unblock relationships with banks and obtain licenses.” The fact is that the US Department of Justice is investigating Binance and Zhao not only because of cooperation with Russia, but also because of suspicions of money laundering. Previously, Binance and Zhao were also targeted by the Commodity Futures Trading Commission (CFTC) and the US Securities and Exchange Commission (SEC), which accused them of a range of violations and failure to comply with regulatory requirements. According to the WSJ, Zhao’s “insistence on remaining at the helm” disappointed several exchange executives, who believed that his departure would “increase the company’s chances of survival.” According to the publication’s interlocutors familiar with the discussions, Binance is engaged in discussions about whether Zhao should resign, both internally and jointly with the US Department of Justice.
Still, the exchange is bracing for a possible downturn in business, having laid off at least 1,500 employees this year to cut costs. Moreover, the staff reduction, according to some former employees of the company, also did not go smoothly: some of them found out about the dismissal after the fact, because they were denied access to the system. However, not only exchange employees, but also participants in the cryptocurrency market began to prepare for the collapse of the “Binance empire.” As one institutional trader told the publication, his company even conducted “fire drills” to quickly withdraw its assets from Binance in the event of an exchange collapse.
What could happen to Binance will have “huge consequences for the crypto industry,” journalists are convinced. According to Anthony Georgiades, general partner at Innovating Capital, it is currently impossible to estimate what would happen to the industry if Binance were to disappear, as “it has been responsible for driving a huge amount of innovation and growth.” Market participants believe that although other exchanges may take Binance’s place in the future, in the short term its departure will have a major impact on the market, causing a decrease in liquidity and, as a result, a sharp change in token prices.
2023-09-28 05:15:33
#WSJ #Binance #verge #collapse #due #pressure #authorities
