This week, Binance agreed to a $4.3 billion settlement and saw founder Changpeng Zhao exit as CEO; the U.S. SEC levels charges against Kraken; and HECO Bridge, another venture affiliated with Justin Sun, suffered an $85 million hack.
Binance troubles
- The U.S. Department of Justice (DoJ) proposed a $4 billion settlement with Binance over money laundering and sanction violation allegations.
- Changpeng Zhao resigned as Binance founder due to the criminal charges. Uncertainty surrounds extradition as Zhao resides in the United Arab Emirates.
- Binance’s influence remains strong in the crypto sector, as seen with Blur’s listing triggering a price increase.
The aftermath
- Binance’s BNB token dropped 9.2% in 24 hours, and the exchange experienced outflows of $1.3 billion in a week.
- Funds leaving Binance were reportedly moving to Coinbase Pro, driven by the anticipation of a spot Bitcoin ETF in the U.S.
- Coinbase director Conor Grogan confirmed that Binance can cover the fine without using users’ funds.
- Newly-appointed CEO Richard Teng reassured Binance’s financial strength amidst legal troubles.
“Flight risk”
- Changpeng Zhao’s sentencing is scheduled for Feb. 23, 2024. The DoJ wants him to remain in the U.S., citing him as a “flight risk.”
- Zhao’s legal team argued that he takes responsibility for the charges and doesn’t pose a flight risk, suggesting home arrest and community confinement in the UAE.
HECO bridge suffers $83M hack
- HECO bridge, associated with Justin Sun’s HTX exchange, experienced an $85 million breach, along with an unauthorized outflow of $12.4 million.
- HTX paused withdrawals but failed to resume them on the promised date.
- Sun announced an airdrop for HTX and Poloniex customers after the hack incidents.
Bankman-Fried’s leave request denied, Do Kwon extradition approved
- Sam Bankman-Fried’s request for release before his sentencing was denied due to past attempts to tamper with witness testimony.
- A Montenegrin court approved Do Kwon’s extradition requests from South Korea and the U.S.
SEC comes for Kraken amid regulatory efforts
- The U.S. SEC alleged that Kraken is offering unlicensed securities services.
- Kraken plans to face the SEC in court.
- House Majority Whip Tom Emmer believes existing financial laws are sufficient to address bad actors in the crypto industry.
Updates on ETF discussions
- BlackRock and Grayscale met with the SEC regarding their pending ETF applications.
- Grayscale updated its ETF filing, revealing plans to convert the GBTC Trust into a spot BTC ETF.
- SEC Commissioner Hester Peirce expressed optimism about approving a spot BTC ETF.
Hackers steal $290 million in November
- KyberSwap DEX lost $45 million in an exploit, contributing to a total of $290 million lost in November across various crypto protocols.
- Tether froze $225 million in USDT linked to a $3.3 billion scam scheme.
Blast commands a $310 million inflow
- Blast, an Ethereum layer-2 protocol, attracted over $310 million in inflows after its launch.
Hot Take: Crypto Troubles and Regulatory Challenges Continue
This week’s events highlight ongoing challenges in the crypto industry, including legal troubles for major exchanges like Binance and Kraken. The regulatory landscape is intensifying, with allegations of unlicensed services and discussions around ETFs. Hackers also continue to target crypto platforms, causing significant losses. However, amidst the chaos, new projects like Blast show promise and attract significant investments. As the industry evolves, it remains crucial for players to navigate regulatory requirements and implement robust security measures to protect users’ funds.
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