The sudden downfall of Canadian Changpeng Zhao, the crypto titan behind Binance

Canadian Changpeng Zhao had long cultivated the image of the rugged pugilist of the cryptocurrencies world.

When his rival Sam Bankman-Fried’s crypto empire collapsed a year ago, Zhao, or “CZ” as his fans call him, was in the middle of it all, yanking his money in a very public way and helping trigger the ultimately fatal run on the firms. Years earlier he claimed the company’s headquarters was wherever he happened to be, a thinly veiled salvo against regulators trying to nail down jurisdiction. And this March, when U.S. regulators charged Zhao and his firm, Binance Holdings, with violating U.S. securities laws, his on-line response was “4,” which is Zhao code for dismissing something as unworthy of his attention.

On Tuesday, though, Zhao cut a very different image in a Seattle courtroom. Dressed in dark suit and pale blue tie before a federal judge, he pleaded guilty to criminal charges for anti-money laundering and U.S. sanctions violations, including allowing transactions with Hamas and other terrorist groups, under a sweeping deal with the Justice department designed to keep the biggest crypto exchange operating. Binance itself agreed to plead guilty to criminal charges and pay over US$4 billion in penalties. Zhao stepped down as CEO and will pay a US$50 million fine.

Zhao’s capitulation in many ways is the culmination of a multi-year dragnet by international regulators who sought to rein in and impose regulations on Binance — and, by extension, the broader industry.

Moreover, it marks the second time in less than a year that the crypto universe, still reeling from a crash that shaved some US$2 trillion off the value of the market, loses one of its biggest stars. Bankman-Fried may have been the best known name in