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Binance, SEC strike deal to keep US customer assets in country

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Binance, the largest cryptocurrency exchange globally, and its U.S. affiliate, Binance.US, have reached an agreement with the U.S. Securities and Exchange Commission (SEC) to keep U.S. customer assets within the United States until the resolution of an ongoing lawsuit.

This information was disclosed in court documents filed on Friday and is pending approval from the federal judge overseeing the case. The agreement aims to prevent U.S. customer assets from being moved offshore and limits access to these assets solely to Binance.US employees.

SEC
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The SEC filed a lawsuit on June 5 against Binance, its CEO Changpeng Zhao, and Binance.US’s operator, accusing Binance of activities such as artificially inflating trading volumes, diverting customer funds, failing to restrict U.S. customers, and misleading investors regarding market surveillance controls.

This lawsuit, along with a separate one filed by the SEC against U.S. exchange Coinbase, represents an intensified regulatory crackdown on the cryptocurrency industry.

While the agreement does not resolve the SEC lawsuit, it includes measures to ensure that Binance.US officials do not have access to private keys for wallets, hardware wallets, or root access to Binance.US’s Amazon Web Services tools.

The SEC stated that the emergency relief order obtained for Binance.US customers will safeguard their assets and enable them to continue withdrawing those assets.

Also Read: Nasdaq to buy fintech firm Adenza for $10.5 billion

Gurbir Grewal, director of the SEC’s enforcement division, emphasized the necessity of these restrictions, citing concerns about Binance and Changpeng Zhao having control over customer assets and potentially mishandling or diverting them.

Binance responded through a spokesperson, expressing satisfaction that the disagreement over the SEC’s emergency relief request was resolved on mutually acceptable terms while reiterating the commitment to ensuring user funds’ safety on all Binance-affiliated platforms.

“Given that Changpeng Zhao and Binance have control of the platforms’ customers’ assets and have been able to commingle customer assets or divert customer assets as they please… these prohibitions are essential to protecting investor assets,” said Gurbir Grewal, director of the SEC’s enforcement division, in a statement.

In a statement on Saturday, a representative for Binance said, “Although we maintain that the SEC’s request for emergency relief was entirely unwarranted, we are pleased that the disagreement over this request was resolved on mutually acceptable terms. User funds have been and always will be safe and secure on all Binance-affiliated platforms.”

The proposed agreement also entails Binance.US creating new crypto wallets inaccessible to employees of the global Binance exchange, providing additional information to the SEC, and agreeing to an expedited discovery schedule.

In response to the SEC’s request to freeze Binance.US’s assets, the U.S. affiliate suspended dollar deposits and set a June 13 deadline for customers to withdraw their dollar funds.

Binance

Binance withdrawals hit $1.9 billion in 24 hours

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Binance, the biggest cryptocurrency exchange in the world saw $1.9 billion worth of withdrawals in only one day. Regulators are closely monitoring how cryptocurrency exchanges like Binance and the now-bankrupt erstwhile rival FTX handle customer deposits.

Binance
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The U.S. Securities and Exchange Commission charged FTX founder Sam Bankman-Fried on Tuesday with defrauding investors. According to Nansen data, the $1.9 billion in withdrawals of Ethereum-based tokens represents the highest 24-hour outflow of assets since June 13 and is responsible for most of the money taken out during the previous seven days.

According to Binance CEO Changpeng Zhao, the exchange has once witnessed “some withdrawals” totaling over $1.1 billion. He then stated that the business had experienced worse days before. He tweeted, “We’re seeing the money flowing back already. We saw some withdrawals today (net $1.14b ish). We have seen this before. Some days we have net withdrawals; some days we have net deposits.”

Zhao, also known as “CZ,” claimed that after FTX’s demise in November, people had lost faith in the cryptocurrency industry. Sam Bankman-Fried, the founder of Binance’s former rival, was arrested this week in the Bahamas after being charged with a crime in the US. Early in November, FTX collapsed, sparking a surge of public calls for more regulations of the cryptocurrency sector.

Sam Bankman-Fried, the exchange’s founder, had bragged that it was the “most regulated,” yet he had established it in the Bahamas, where regulation was lax and had covertly exploited customer deposits. Attorneys for FTX said during a bankruptcy hearing that Bankman-Fried operated the exchange as a “personal fiefdom.” According to Bankman-Fried, he didn’t intentionally do anything improper.

The cost of digital coins has been falling due to worries about the industry’s state. With a year-to-date loss of more than 60%, the price of bitcoin was last going below $18,000.

However, following FTX’s stunning collapse, Binance’s company is also being scrutinized. According to unnamed sources cited by Reuters on Monday, US authorities were considering concluding its probe into Binance’s money laundering by “filing criminal charges against specific officials, including founder Changpeng Zhao.”

Bankman-Fried was charged with eight crimes, including conspiracy and wire fraud, on Tuesday in the US. US markets watchdogs have also accused Bankman-Fried of scamming investors and clients separately.

Bankman-Fried, often known as “SBF,” is a well-known figure in the cryptocurrency world who was instantly shunned after his business experienced a liquidity difficulty and declared bankruptcy last month, preventing at least one million depositors from having access to their money.

Splits among US Department of Justice officials are delaying the resolution of a protracted criminal investigation into Binance, the largest cryptocurrency exchange in the world, as per Reuters. The inquiry was launched in 2018 and is concentrated on Binance’s compliance with American anti-money laundering rules and sanctions.

As per Reuters several of the at least six federal prosecutors working the case feel that the information previously acquired supports taking serious action against the crypto exchange and charging certain officials, including the founder Changpeng Zhao, with crimes. The sources claimed that others have urged for taking the time to consider further evidence.

Sam Bankman-Fried

Former FTX CEO Sam Bankman-Fried arrested in the Bahamas

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Sam Bankman-Fried, an American entrepreneur, businessman, and former billionaire, was detained in the Bahamas after US prosecutors filed criminal charges against him.

Sam Bankman-Fried, the former CEO of FTX, was detained on Monday in the Bahamas based on allegations brought in the United States. Several charges of wire fraud and conspiracy in relation to the failure of his crypto exchange are among the federal accusations that were revealed on Tuesday morning.

Sam Bankman-Fried
Image Source: businesstoday.in

The Office of the Attorney General of the Bahamas stated in a statement issued on Monday that Fried’s arrest is following the receipt of formal information from the USA that it has brought criminal charges against Fried and is likely to request his extradition.

Fried was taken into custody, according to the U.S. Attorney’s Office for the Southern District of New York, which also noted that the arrest was undertaken in accordance with a sealed indictment.

Seven charges, including wire fraud and conspiracy to commit wire fraud against lenders and customers, securities fraud, conspiracy to commit money laundering, and infringements of campaign finance laws, were included in the grand jury’s indictment against Fried.

The Justice Department and federal regulators were looking into whether FTX utilized client cash to support risky wagers at Fried’s hedge company, Alameda Research.

The Department of Justice is exploring charges against Binance, the top exchange in the cryptocurrency market, at the same time as US officials have indicted Bankman-Fried. According to Reuters, some Justice Department officials think they have enough evidence in their extensive investigation of Binance to bring charges against the firm and some of its top executives.

According to Reuters, Binance is being looked at for potential money laundering and sanctions violations. Four people with knowledge of the situation told Reuters that other department members have argued in favor of devoting time to reviewing further evidence.

Additionally, the arrest occurred a day before Fried was supposed to testify before American lawmakers on Tuesday and provide testimony via video link.

According to Reuters, Bankman-Fried surreptitiously transferred $10 billion in FTX customer money to his private trading company, Alameda Research, which led to FTX’s liquidity crisis.

Sam Bankman-Fried attempted to separate himself from allegations of fraud in a series of statements and media interviews acknowledging risk management problems but claiming he never purposefully mixed customer assets on FTX with assets at Alameda.

Before it shut down last month, FTX was among the biggest crypto exchanges in the world. In a single day, users withdrew around $5 billion worth of cryptocurrency as worries about the exchange’s viability grew. On November 11, Bankman-Fried submitted his resignation, and FTX declared Chapter 11 bankruptcy.

Additionally, Bankman-Fried was sued by American cryptocurrency investors who claimed that he and numerous celebrities who advocated FTX used misleading tactics, causing the investors to lose $11 billion in losses.

The collapse of FTX was the latest upheaval for the cryptocurrency market this year. A string of meltdowns that have brought down other significant players like Voyager Digital and Celsius Network has caused the total cryptocurrency market to decline.

free speech

Supporting Free Speech, Binance CEO invests $500 mn in Twitter

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Binance CEO Changpeng Zhao recently stated that his company had made an investment of $500 million in Twitter because he is “extremely supportive” of free speech.

free speech
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Changpeng stated that there were “very strong reasons” for investing in Twitter. With over 7 million follower count, Zhao is active on the social networking platform.

Zhao, aka CZ, revealed to a crowd at the Web Summit in Lisbon, “When we invest in a deal, we’re very comfortable if the deal goes through. We’re very comfortable if the deal doesn’t go through. We always want to get to a point where we’re in that position. Number one is that we want to be extremely supportive of free speech. Twitter is an important free speech platform.”

“I am a heavy Twitter user. I want to invest in products that are important for our industry”, said Zhao, adding that Binance intended to be a long-term investment in the company.

After months of twists and turns within and outside the courtroom, the deal to acquire Twitter was finally finalized on Thursday. After acquisition. Elon Musk fired the platform’s top executives. Zhao said that because Musk is “a pretty hard guy for me to predict,” he was “honestly” a “little bit surprised” when the deal finally closed.

Since Musk completely controls the board and decision-making in the now-private Twitter, it is unknown how actively involved minority investors like Binance might be. In the $44 billion acquisition, the majority of his co-investors include funds like Sequoia Capital, Fidelity Management, Andreessen Horowitz, and Brookfield.

In an effort to monetize the service and reduce Twitter’s reliance on advertisements, Musk announced on Tuesday that the social media network would charge $8 for its Blue service, which includes the highly desired “verified” badge. Zhao stated he agreed with the approach.

Musk appeared to have second thoughts about his dedication to cryptocurrencies as he put the Twitter deal together. The largest digital asset exchange in the world, Binance Holdings Ltd., contributed $500 million to Musk’s financing for the transaction in May and is reportedly putting together a team to investigate how cryptocurrency might benefit the social media giant.

In a string of text conversations made public as part of the dispute around the Twitter transaction, Musk initially suggested utilizing blockchain to support free expression and decrease spam on social media, only to respond later that “blockchain Twitter isn’t possible.”

Musk has a lot of issues with Twitter bots and spam, which led to a protracted court spat that placed his plans to buy the company at risk. The problem is especially crucial in the cryptocurrency industry, where spam accounts impersonate well-known individuals like Musk to spread the word about frauds involving bogus cryptocurrency giveaways.

However, some proponents of digital assets think that Twitter bots might be decreased by adopting blockchain. Musk’s desire to “authenticate all real humans” on Twitter may be promoted through an NFT passport or a blockchain-based identity verification tool.

When it comes to daily cryptocurrency trading volume, Binance is the largest crypto exchange in the world. It was established in 2017 by d developer Changpeng Zhao, who had previously built high-frequency trading software. After the Chinese government began to regulate cryptocurrencies more strictly, Binance eventually transferred its headquarters outside China.

Chengpeng Zhao

Success Story of Changpeng Zhao: From Zero to Billionaire

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Chengpeng Zhao is a Chinese-Canadian business executive who is the chief executive officer and founder of Binance. Binance is the world’s largest cryptocurrency exchange by trading volume as of July 2022. Chengpeng Zhao was born in Jiangsu, China and migrated to Canada at a young age with his family. Currently, he is established in Singapore.

Chengpeng Zhao
Image Source: business-standard.com

formerly, he was a member of the team that developed Blockchain.info and also worked as Chief Technology Officer at OKCoin. He is ranked 113th richest in the world, having a net worth of approximately 14.9 billion USD as of May 2022, according to Bloomberg Billionaires Index.

Early Life and Education

Chengpeng Zhao was born in Jiangsu province in China. He moves to Canada with his family in the late 1980s settling in Vancouver, British Columbia. His parents both opted for teaching as their profession in China. His childhood had been a difficult one, his family condition was not great so he supported his family by working several service jobs. He attended McGill University in Montreal, Quebec where is majored in computer science.

Chengpeng Zhao is currently the most recognizable face in crypto. Many people are getting millions, and also some people are losing millions via cryptocurrency trading since there is not any shortage of cash to make in the 1 trillion USD cryptocurrency sector. The no of billionaires who have acquired a fortune in crypto has increased to 19 in 2022.

Chengpeng Zhao: From China to Canada to Dubai

Chengpeng Zhao chose Dubai as his new home because he believed that the cryptocurrency space is highly international and diversified and that Dubai is a true innovation hub that houses a highly innovative and diverse group.

Chengpeng Zhao got into developing market-focused trading software, having majored in computer science including an internship he did at the Tokyo Stock Exchange and a full-time job at Bloomberg, a global financial data giant, for four years.

During his time at Bloomberg, he developed trading software for Wall Street, which was designed to help investors trade contracts, used to trade an asset at a predetermined cost.

Then, he founded his own company known as Fusion Systems. Fusion Systems was founded to develop trading systems for brokers.

Before launching Binance, he was involved in different crypto companies. It includes his work as a head of technology at Blockchain.com where he became interested in Bitcoin, the world’s greatest digital currency.

Despite the fact that Chengpeng Zhao was from the traditional financial space, he was greatly influenced by Bitcoin, being borderless and unrestrained from any intermediaries. He liked the fact that Bitcoin tackled many money-related issues which includes freedom to trade, supply and low fees.

The largest cryptocurrency platform in the world

Chengpeng Zhao founded Binance in less than eight months by being inspired by the principles of Bitcoin. Binance Coin was launched the same year after Binance’s launch in July 2017. Binance Coin is a utility token that provides its owners with several benefits, like discounts on trading fees. Also, in 2019, Binance launched Smart Chain which is an Ethereum competitor.

Binance’s worth rose in April 2019 to 4.5 billion USD, and the growth has not stopped there. It has taken its first step towards its expansion in Abu Dhabi after getting the permission to start the operations. Binance has approximately 120 million users currently, and about 50 billion USD is traded daily on this platform.

Chengpeng Zhao is currently ranked 35th on the list of the world’s richest people having an estimated net worth of 34.5 billion USD as of August 2022. About all of his worth is in cryptocurrency.

Binance Launches DEX Earlier to the Decided Launch Date

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Recently, the world’s largest crypto exchange, Binance, had launched the native DLT platform of Binance- the Binance Chain, and today, the company rolled out the Binance Decentralized Exchange, i.e. DEX, ahead of its decided launch date.

Binance Dex
Image Source: bitcoinexchangeguide.com

Binance DEX is a decentralised P2P exchange platform that allows the user to have all the control over their assets while trading on the exchange. The exchange is powered by the Binance Chain blockchain protocol.

Though the exchange is not supporting any transactions, as of now, the exchange is open for the user to create their wallets. The platform will let the users create both the trusted as well as the third party wallets, including CoolWallet, Coinomi Wallet, Atomic Wallet, Guarda Wallet, Exodus, ZelCore Wallet, Enjin, Magnum Wallet, Infinito Wallet, Ledger, Math Wallet, Ellipal Wallet, over it.

Currently, the platform also permits the users to access tools, including the Binance Chain Explorer, wallet, public data nodes, and even the APIs.

In recent years, many of the companies have already brought those decentralised exchanges in the market, such that to promote more user control over their assets. Now Binance has also taken the initiative for the same. The company has also asked the other developers to step-in to create new tokens for its Binance mainnet.

“We believe decentralized exchanges bring new hope and new possibilities, offering a trustless and transparent financial system. With no central custody of funds, Binance DEX offers far more control over your own assets. We hope this brings a new level of freedom to our community. We will work closely with projects and teams to grow the entire ecosystem.” said Changpeng Zhao, the CEO of Binance.

Though the launch of the exchange is early, the company had been testing the exchange over a simulated trading environment, where the exchange did over 8.5 million transactions over two months of its testnet period.

The company has also migrated its Binance coin from Ethereum network blockchain-compatible ERC-20 to BEP-2 Binance Chain to be used as the blockchain’s native asset to assist network transactions.