The end of an era for Binance, troubles for Kraken: Law Decoded
Last week, the legal drama featuring the world’s largest crypto exchange and United States law enforcement ended with a plea deal. Binance and Changpeng “CZ” Zhao have admitted violating U.S. Anti-Money Laundering laws, agreeing to pay $4.3 billion in fines. CZ resigned as CEO of Binance as part of the deal. Binance’s former head of regional markets outside the U.S., Richard Teng, is the new CEO.
Cardano founder Charles Hoskinson reflected on the plea deal news, calling it “the end of an era.” In Hoskinson’s opinion, entrepreneurs must comply with regulations or develop permissionless protocols that can’t be regulated. Hoskinson warned that the world is changing and that entrepreneurs will no longer be able to get by using centralized systems while simultaneously not complying with regulations. This is because “the United States has a financial regime that basically has been weaponized,” and this regime will not allow entrepreneurs to open up markets that let “the enemies of America to basically trade and do things.”
Meanwhile, Kraken, another major crypto exchange, has been dragged into another legal fight with the U.S. Securities Exchange Commission (SEC). In a complaint filed in a San Francisco federal court, the SEC claimed that Kraken has been operating a platform that unlawfully facilitated the buying and selling of cryptocurrencies since 2018. Additionally, the SEC alleged Kraken’s business practices and “deficient” internal controls saw the exchange commingle up to $33 billion worth of customer assets with its own. The SEC said this resulted in a “significant risk of loss” for its clients. Kraken founder Jesse Powell called the action an “assault on America” and called the SEC the U.S.’s “top decel.” Powell even
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