Market data reveals some astonishing facts that over the past 24 hours, around $956 million have been outflowed from the crypto exchange Binance , after the COE of Binance, Changpeng Zhao stepped down and faced prison time after being proved guilty on Tuesday to settle the year’s long US investigation.
Zhao agreement to pay $4.3 billion to US authorities raised uncertainties about the future of the world’s largest crypto exchange and marks another setback for an industry afflicted with various scandals. Zhao’s post has been taken over by a senior Binance executive, Richard Teng, who joined in 2021, the company said.
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Charges against Zhao
It was still not clear on Wednesday that how much time Zhao will have to spend in jail and how much influence, as the founder and major shareholder of the company, he will leave behind. Many analysts also says that the agreement was not going to resolve the challenges faced by the US exchange. Charges upon Binance for violating US securities laws, by the Exchange Commission still remains unsolved.
Robert Le, a crypto analyst at data firm PitchBook says that Binance is not entirely out of the challenging situation.
Influence on the Investors
Nansen, a crypto analytics platform says that some investors had been disturbed by the news of pulling out $956 million from the exchange. But these outflows are small compared to the $65 billion assets that remain on Binance.
Binance wasn’t able to give an account about more than 100,000 suspicious transactions, which included organizations, the United States described as terrorist groups. In addition to that, it also it failed to report the transactions with websites selling child sexual abuse materials.
Zhao’s Acceptance
Binance did not immediately respond to a request for comment, however it stated that they have worked hard to make Binance,”safer and secure”. Zhao’s lawyers did not respond to requests for comment on Wednesday. On Tuesday, he accepted that he made mistake for which he takes the responsibility.
Prison Time
Although Zhao’s and Binance’s investigation has been going on since 2018, Zhao exits represents a dramatic development for one of the most influential figures in the crypto industry. On Tuesday Zhao entered a plea who currently lives in United Arab Emirates (UAE).
He has been sentenced prison for 18 months under federal guidelines and has agreed not to appeal for any sentence within those 18 months. Justice Department spokesperson said on Wednesday that the prosecution will look on how much jail time to seek closer to Zhao’s February 23 sentencing hearing in Seattle.
Zhao has agreed to pay $175 million bail bond, with extra $15 million held in trust account. Reuters could not determine his location on Wednesday. Another Justice Department spokeperson said that, at Tuesday, Zhao’s lawyers said he would remain in Seattle are through Monday evening, after that he can return to UAE.
But on Wednesday prosecution urged the federal judge that Zhao should not be permitted to leave US before to his February sentencing. They stated that Zhao had a serious risk of fleeing despite all his bailing conditions.
“There is no combination of conditions sufficient to protect against the risk of flight and ensure Zhao’s return” for sentencing, the prosecutors said.
According to the reported facts, Zhao could have been charged with more serious crimes with longer prison time, but him choosing to live abroad in order to escape capture the decision maker had to assess this in the light of likelihood.
Arthur Hayes’s And Sam Banksman’s Case
According to some legal experts Zhao is expected to stay in prison for about a year or even less, mentioning Arthur Hayes, who also admitted his guilt to violations related to anti-money laundering.
As a result, Hayes was sentenced to six months of house arrest in 2022, despite that government charged him with prison time.
On the other hand Sam Banksman, the founder of FTX, was found guilty this month in defrauding his customers now bankrupt crypto exchange.
Conclusion
The proceedings also refrains Zhao from any involvement in managing or any other operations, whether present or future. Ever since Binance was found in 2017, it had maintained a tight grip, while Zhao remains the major shareholder of the company and on Tuesday it was said that he will be available to the team whenever needed.
Yesha Yadav, a law professor at Vanderbilt University, wrote in an email to Reuters that she expects Binance to be more careful from now.