Binance announced that they had fired the employee, as "This behavior constitutes front-running based on non-public information obtained from his previous role and is a clear breach of company policy." The company became aware of the insider trading after they were alerted by outside parties who submitted tips to the company.
Binance acknowledges employee insider trading
Binance announced on Twitter that they had fired an employee after discovering that they had engaged in insider trading. The employee took a large position in a token that he knew would be engaging in a "token generation event", then quickly sold off the tokens after the project announced the event. According to Binance, this allowed him to "realize significant profits".
Changpeng Zhao sentenced to four months imprisonment
Former Binance CEO Changpeng "CZ" Zhao has been sentenced to four months in prison after pleading guilty to money laundering-related charges. The charges were filed in November, and Zhao entered a guilty plea, resigned from the company, and agreed to pay a $50 million fine.
Prosecutors sought a three year sentence for Zhao, while Zhao requested to serve no time. The judge ultimately decided on a sentence closer to the five-month sentence that was being recommended by the Probation Office.
The AEUR stablecoin isn't
Binance says traders must have missed the memo on the AEUR stablecoin, which was intended to be pegged to the Euro. Shortly after it was listed on Binance, high demand caused the token — which had a limited supply of 5 million — to begin trading for as high as €3 per token. "[U]sers ... might not have realized its standing as a stablecoin" wrote Binance in an announcement, published the day after the exchange suspended trading in the token due to "abnormal volatility".
Binance announced a compensation plan for users who purchased the token during an eligibility period and who were unable to resell, in an apparent attempt to placate the angry traders who accused Binance of "scamming" them by halting trading.
AEUR was issued by Anchored Coins, a Swiss stablecoin issuer.
Binance fined over $4 billion, founder pleads guilty and resigns
Binance founder Changpeng "CZ" Zhao pleaded guilty to money laundering charges and agreed to step down as CEO of Binance, the largest global cryptocurrency exchange. He will pay a $50 million fine and faces the possibility of 18 months in prison.
Binance agreed to pay $4.3 billion in restitution for widespread wrongdoing including failure to implement proper anti-money laundering programs, unlicensed money transmitting, and sanctions violations. Binance will be allowed to continue operating, but will be subjected to a three-year-long monitorship program to ensure AML and sanctions compliance.
Simultaneously with the DOJ action, Binance reached agreements with the CFTC, FinCen, and OFAC on ongoing legal issues. Notably, the SEC lawsuit was not among those settled.
CZ posted a long thread on Twitter, admitting "I made mistakes, and I must take responsibility," carefully sidestepping mentioning what any of those mistakes were.
- "Binance and CEO Plead Guilty to Federal Charges in $4B Resolution", U.S. Department of Justice [archive]
DOJ reportedly seeking $4 billion resolution to Binance investigation, with possible criminal charges against CEO
According to Bloomberg, ongoing negotiations between the U.S. Department of Justice and Binance have involved penalties greater than $4 billion as part of ending an ongoing, multi-year probe into the exchange. Such a settlement would not insulate founder Changpeng "CZ" Zhao from criminal charges.
The negotiation may involve a deferred prosecution agreement, in which the US would file a criminal complaint but agree not to prosecute so long as Binance met agreed conditions under a monitoring process.
It remains to be seen if this is the avenue the DOJ and Binance will go with. A Bloomberg source speculated that a decision could come within the next few weeks.
Wallet linked to Binance deployer loses $27 million in apparent hack
An attacker apparently stole $27 million in the Tether stablecoin from a wallet that had just withdrawn the funds from their Binance account. The hacker quickly converted the funds to evade attempts at freezing the stolen assets.
Crypto researcher zachxbt observed that the wallet targeted for the theft had in 2019 received a transfer from the Binance deployer, suggesting that the compromised wallet may have some ties to Binance itself.
Binance.US CEO Brian Shroder bails as the company cuts 1/3 of its employees
Brian Shroder, the CEO of Binance's US entity, has left the crypto exchange as it faces an existential lawsuit from the U.S. SEC. Shroder is only the latest exec to leave Binance and its various regional arms in what is becoming a mass exodus in recent months. The company has also lost its general counsel, chief strategy officer, head of investigations, a senior VP of compliance, and two leaders of Binance's Russian arm.
Simultaneously, Binance.US announced it would be cutting 1/3 of its employees, or more than 100 people. This is the second staffing cut since the SEC lawsuit was filed in June — Binance.US cut around 50 positions, then around 10% of employees, shortly after the lawsuit was announced. The primary Binance entity also fired more than 1,000 people in July.
- "Binance.US CEO Leaves Embattled Crypto Exchange", The Wall Street Journal [archive]
Binance ordered to halt operations in Belgium
Belgium's Financial Services and Markets Authority alleged on June 2023 is violating prohibitions against "offering and providing exchange services in Belgium between virtual currencies and legal currencies, as well as custody wallet services, from countries that are not members of the European Economic Area". The regulator ordered Binance to immediately stop providing "any and all such services" in the country.
The regulator also demanded Binance return all crypto assets to customers, or transfer them to a company authorized in Belgium. They also noted that "The Crown Prosecutor of Brussels has been informed of the acts that are liable to constitute a criminal offence."
Binance cancels registration in the United Kingdom
Binance's footprint is shrinking even further, as the company has canceled its registration with the United Kingdom's Financial Conduct Authority (FCA). This means that the company will not be able to perform any regulated activities in the country.
Binance had applied for registration after being warned by the FCA in July 2021 to seek registration before launching its business in the region.
Since the beginning of June, Binance has also announced it will exit the Netherlands and Cyprus amid regulatory issues.
Wyre finally shuts down
The crypto payments platform Wyre finally announced they would be winding down "due to market conditions". This came after a January announcement from the CEO, where it was not entirely clear whether the company was shutting down or just massively "scaling back".
Wyre had been a partner of Binance US, through which Binance was able to accept USD deposits. However, Binance US is now the target of SEC regulatory action, and has suspended US dollar deposits. Wyre wrote in their announcement that the closure "is not due to any regulatory agency direction". Sure thing.