Changpeng Zhao stepped down as CEO of Binance on Tuesday, Nov. 21 after the company pleaded guilty to skirting US money laundering laws, agreeing to pay fines of more than $4 billion.
While crypto markets corrected on the day, the latest fall from grace did not precipitate an all out market panic.
The tone in online chat groups was also distinctly different from Sam Bankman-Fried’s cataclysmic downfall, most notably due to the fact that collateral damage has been contained, and users still have access to their funds. Various crypto users and influencers even went out of their way to pay their respects to CZ, as he departs relatively unscathed.
Why are people comparing CZ and SBF?
SBF -> Your money is gone.
CZ -> Your money is still there.Strikingly different situations. #Bitcoin #Binance #FTX
— Kevin Svenson (@KevinSvenson_) November 23, 2023
Still, CZ now joins a number of high-profile executives who have fallen foul since 2022.
1. Do Kwon
Do Kwon founded Terraform Labs in 2018, the now-defunct company behind TerraUSD and Luna, both of which blew up in May 2022 marking the unofficial start of crypto winter.
The Stanford graduate positioned the project as the next big thing in cryptocurrency, generating billions of dollars in investment and global attention. He was characterised as a “genius” in South Korean media.
But in May 2022, the TerraUSD (UST) stablecoin wiped out over $50 billion in investments, draining Terra’s 80,000 in Bitcoin reserves, and sending shockwaves throughout crypto. The hole would be plugged for a limited time, but more casualties would emerge right up until it was revealed that FTX was part of the daisy chain of weak links some months later.
Terra-Luna’s wipeout annihilated billions practically overnight, and an estimated $500 billion worth of losses hit the crypto markets in the months following the event.
All in all, Do Kwon had marketed a glorified Ponzi scheme, was brash and hubristic on social media, and spent months on the run from South Korean authorities before and after the epic collapse.
He was arrested in Montenegro this year after being caught trying to catch a flight using fake Costa Rican travel documents.
He faces multiple criminal charges in the United States and South Korea.
2. Sam Bankman-Fried SBF
While Do Kwon was the first former billionaire to initiate the long-winded saga of crypto collapses, he certainly wasn’t the most famous.
That title goes to Sam Bankman-Fried.
Bankman-Fried launched FTX in 2019, which grew exponentially to become the world’s second-biggest crypto exchange after Binance. The company’s meteoric rise raised serious questions about the nature of the relationship between the Securities and Exchange Commission Chairman Gary Gensler, and SBF, who had cosy ties with the fallen crypto kingpin.
Bankman-Fried quickly established himself as an unofficial ambassador for bitcoin businesses, being heavily praised in the media as the JP Morgan of Crypto and even receiving an audience in the US Congress. Eventually, it would be revealed that this airtime didn’t come for free; SBF had donated upwards of $40 million to politicians, most of which went to the US democratic party.
According to Forbes, a publication notorious for promoting shady characters to stardom, Bankman-Fried had a net worth of US$24 billion at one time in 2022, at least on paper.
Forbes needs better investigative journalists before they put someone on the cover. pic.twitter.com/MRJx6cQEVB
— Steve Burns (@SJosephBurns) November 23, 2023
As is widely known today, Bankman-Fried’s rise to prominence was chalk full of fraud, lies and deception. SBF used client funds for everything from buying himself expensive property to covering up financial crimes by FTX’s sister firm Alameda Research. The list of crimes is extensive.
In November 2022, within hours of information about FTX’s dire financial situation being released, the market took a turn for the worst. SBF’s apparent rival, CZ, revealed that Binance would sell all of its FTX tokens due to the financial black hole in the exchange’s balance sheet. Zero-hour came when Caroline Ellison offered to buy all FTT tokens at $22 below market price, at which point the spectacular downfall of FTX and Bankman-Fried’s fraudulent enterprise came to its end.
SBF’s stardom was thus reduced to infamy.
Bankman-Fried was arrested in the Bahamas in January and found guilty of “one of the biggest financial frauds in American history,” according to US authorities. He may spend the rest of his life in prison.
During the trial, the 31-year-old admitted to “mistakes” but denied attempting to deceive anyone, even though he admitted to doing exactly that on various occasions.
3. Changpeng Zhao CZ
Born in China in 1977, Zhao relocated to Canada in the 1980s and eventually graduated from McGill University wit ha computer science degree, according to the Bloomberg Billionaires Index.
He launched Binance in Shanghai in 2017 and oversaw the exchange’s fast-paced rise to become the world’s largest crypto exchange.
CZ became the richest known figure in Bitcoin after becoming an outspoken celebrity in the crypto community, with 8.7 million followers on X. According to Forbes, his net worth peaked at roughly $65 billion in 2022. Since the FTX implosion, Binance’s operations came under increased scrutiny, with various businesses eventually succumbing to waves of criminal investigations.
By his own admission, CZ had an attitude of growth at all costs. Zhao told Binance employees that it was “better to ask for forgiveness than permission” and prioritised the exchange’s growth there over complying with US law. Notably, US regulators at the SEC have increasingly been under scrutiny themselves for “obstructing congressional oversight”, and being uncooperative with compulsory US processes, per the United States House Committee on Oversight and Accountability.
In other words, there are no clean shirts on either side.
Prominent Bitcoin commentators such as Marty Bent have gone as far as to insinuate that the entire CZ saga is a smokescreen to cover up glaring red flags in US politics.
KYC/AML is the illicit activity. The governments “making people safer” are the biggest criminals in the world.
Where’s Epstein’s list?
Where has the Ukraine money gone?
Which politicians are campaigning using FTX customer money this year?
When will the Pentagon pass an audit? https://t.co/hhqSwFc2g3— Marty Bent (@MartyBent) November 22, 2023
Regardless, the US accused Zhao and Binance of knowingly allowing transactions to militant groups such as the Islamic State and in barred jurisdictions such as North Korea and Iran.
On Tuesday, the firm agreed to pay nearly $4.4 billion in penalties, and CZ will pay $50 million, per court documents. Zhao resigned as CEO of Binance and will reportedly be able to retain his shares in the company. However, he has been banned from being directly involved with Binance.
CZ is expected to face sentencing at a later date. Forbes listed his net worth as $10.2 billion as of Wednesday.
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