Bitcoin Forum

Binance CEO says he’s willing to step down as world's biggest crypto exchange welcomes regulation

The boss of cryptocurrency exchange Binance says he's willing to step down from his role as the company seeks to become a regulated financial institution.

Speaking at a virtual press conference Tuesday, Changpeng "CZ" Zhao said he had no immediate plans to quit his role but that the company does have a succession plan in place.

"We're going to pivot to be a fully regulated financial institution going forward," Zhao told reporters, adding that, during that pivot, he would be "very open" to finding a replacement CEO with more regulatory experience.

Binance is the world's largest digital currency exchange by trading volume. However, it has come under intense regulatory scrutiny lately as authorities around the world seek to clamp down on the fast-growing crypto industry.

In the U.K., the Financial Conduct Authority banned Binance's British unit from undertaking any regulated activity. Binance was one of many crypto firms that withdrew their applications to the U.K.'s temporary licensing regime due to failing to meet anti-money laundering requirements, the FCA said.

Regulators in Japan, Canada and Italy have also clamped down on the firm, warning it is not authorized to operate in the countries.

Read more https://www.cnbc.com/2021/07/27/binance-ceo-says-willing-to-step-down-amid-crypto-crackdown.html

This is somewhat sad news and it explains the last move(s) of Binance.
And this may be the end of an era, the era of big centralized exchanges (if getting regulated I expect Binance "deflate").
Maybe this is when the era of decentralized exchanges begins for real?!

People trust Binance because it is a top exchange and also there is a public figure heading the operation. Accountability brings trust, so it will be a sad day when he steps down. He probably knows what will happen when they decrease the 2 BTC limit, volume will drop and he doesn't want to be a part of it when Binance falls

It appears that CZ wants to not be the Binance CEO anymore when the regulators enter and crackdown on the exchanges in the cryptospace hehe. There also some articles saying that Justin Sun will retire. This might be connected. Is it the invisible hand of Beijing?

If it were the hand of Beijing VZ would have become himself invisible, there is some really weird magic happening there  ;D and nobody is safe, not even the chief of the Interpol (https://en.wikipedia.org/wiki/Meng_Hongwei) I doubt it's because of China, CZ knows his maneuvering pace is getting smaller each day, we've already seen so much news about regulations, from Canada to Hong Kong, they've dropped stock tokens, then they limited leverage, they're not offering margins against the pound and the euro, the way this is going it's clear that they are pressured from all sides. And probably CZ has a lot of skeletons in his closet so he might try to leave while he still can rather than taking on what's coming, I have a feeling he's busy deleting a lot of stuff at the moment.


Decentralized exchanges are targeting people who buy and hold or dump, not people who are actively trading all day and switching between pairs in seconds, this niche will never be covered by decentralized exchanges. If indeed centralized exchanges might be losing customers decentralized one aren't gaining pace either. I assume you're talking about exchanges like bisq, not uniswap tokens.

They shot themselves in the foot when they chose to ignore all of the warnings, so it was bound to happen ^{[unfortunately]}.

You have a point but it doesn't look like he's going to completely abandon Binance:

• Quote from: @cz_binance https://twitter.com/cz_binance/status/1420061159101669380
  We are always hiring for CEOs.
  
  I don't need to be CEO, and I am not leaving. I will always find ways to contribute to the community behind the logo tattooed to my forearm.
  
  I am proud to be a member of the #binance ecosystem. Let's keep growing it.
  

True. However, many people buying or selling crypto only now and then still use the convenience of centralized exchanges, where the interface is helpful and there's tech support. Some did start moving to Bisq and such, but after Binance asking KYC, more will migrate.

Of course, day traders will remain, although now for them will no longer matter if it's Binance or other centralized exchange and they'll have to start being more careful with their earnings and reporting them (!), hence some may go "out of business".



Until now Binance was no-KYC and at hand. With this option no longer available Bisq and such may start growing.

Can't blame him for wanting out of that particular role.  I certainly wouldn't want to be in charge of an exchange, at any point in Bitcoin's history, really, but particularly in the current regulatory climate.  It must be quite daunting when you know that the government of pretty much every nation on earth would prefer it if your company didn't exist.  Any they may endeavour to restrict access for their citizens to your services in future.  Not to mention that people are actively working on technology to make your entire business model obsolete.

They say every man has his price, but I'd still be highly reluctant to take that job, whatever the recompense.

I don't believe in this migration, not on a large scale.
A lot of people, even when it comes to cryptocurrencies don't like totally decentralized solutions, they want a website with customer support, they want the assurance there is somebody to tell them how and what and when.

Besides, even the aspect of protecting your personal info isn't done quite right with decentralized exchanges.
Ok, you protect your mugshot from Binance but you give away your name and bank account to a complete stranger on the internet.... And if you think of not using banks but some other payment method that obfuscates your name it becomes so complicated and so much more expensive that the average Joe will simply not do it.
The ones that care about their privacy are just a few in a million and a lot of them will not deal with something that can land them in a police sting operation.

I disagree. I reckon the invisible hand of Beijing would only use murder as the final alternative action. CZ also has not acted in a way similar to Justin Sun which the hand dislikes.

This is what happens to the famous Chinese CEOs who acts similar to Justin Sun or talks bad about the Chinese communist party. They go back to China for another round of communist brainwashing and keep them in control. However, the official storyline is he will help with a research project for the invisible hand hehe.



Justin Sun, the founder of the Tron blockchain, is participating in a research project at the prestigious Central Party School, the higher education institution that trains cadres of the Communist Party of China.

Sun is “transferring from business to school,” he said on his WeChat and Weibo accounts, a statement some took to imply he’s thinking of winding down his business activities.

The announcement met with support from some Weibo users, who saw it as motivated by nationalist sentiment: “Brother Sun can’t stand the plight of the American Empire and will come back to build socialism with us,” wrote a user identified only as “The banner of Marx.”

Source https://finance.yahoo.com/news/justin-sun-hints-retirement-joins-091216974.html

He's probably looking for away out before the law enforcement bodies which are out for blood catch up with him. Looking at what happened to Bitmex and the arrest of their CEO Arthur Hayes not so long ago. It's apparent that Binance has been facing a lot of scrutiny lately, as seen by all the hurried monthly changes in the services they offer and features of the exchange.

@JeromeTash. Agreed. I speculate that by the end of 2021 Binance might be 30% or more smaller than what it was during the beginning of 2021 hehe. Their Twitter account announced this, however, it was deleted some hours later. I am not quite certain why it was deleted.

https://i.ibb.co/Wp3W1W6/EBEC0682-D8-DB-4-FE8-BB1-A-3-D8-D0127-D86-E.jpg

Source https://mobile.twitter.com/binance/status/1421033044337729536?s=12



Also, it appears this speculation of mine from April 19, 2021 is becoming real hehe.

https://bitcointalk.org/index.php?topic=5331528.0

Weird, there is still a tweet up
https://twitter.com/binance/status/1421067563027603469
but without the part about evaluating partners and all that and a slight change:


They no longer talk about across Europe but just those 3 countries, maybe an alert from the damage control team?

As much as I wish that this would be the case, I don't think it will happen any time soon, or indeed, ever. The average crypto user has shown there is almost no limit to the amount of shit a centralized exchange can force on them and they'll just put up with it and keep using that exchange. Coins hacked. KYC sold, lost, or stolen. Accounts frozen. Ridiculous KYC. Blockchain analysis. Spying on you. Tracking your transactions. Reporting to your government. Insider trading. Market manipulation. Ridiculous fees. The list goes on. Any sane person would have abandoned such exchanges years ago, and yet, centralized exchanges continue to grow and grow.

There is a significant difference between handing over scans of your passport to Binance, who then hand it over to a number of third parties around the world, with no guarantees regarding how securely it is transferred or stored, how many copies are made, and who has access to them, and your name showing up next to a transaction on someone else's bank statement.

Who are their partners? Their banking partners? It appears that the partners said no to any chance of bringing back derivatives and futures trading with leverage hehe. I am not certain if I agree, however. People should be given the right to gamble their money in everywhere they choose.

I am shaking my head on this statement by CZ hehe. Compliance to regulations will always be reactive because there would be no regulations to be proactive to judge if something is illegal or legal until the regulators say they are illegal or illegal.



Earlier in the day, CEO Changpeng "CZ" Zhao said in a tweet that the exchange would take a more proactive approach to compliance.

Source https://www.coindesk.com/binance-to-take-proactive-stance-to-compliance

Not necessarily. It's been obvious to everyone for quite a while that unverified non-KYC accounts will not last, and will eventually be clamped down on entirely. We don't need to wait on Congress passing laws to that effect to know that it is coming. We know that crazy leverage will be clamped down on. We know that these ridiculous interest and lending accounts will be clamped down on.

This statement from CZ should be taken as a warning to all Binance users. Expect more restrictions, more KYC requirements, more privacy invasion.

At this rate, I'm not sure if there'll be a Binance exchange by 2022 ^{[I hope I'm wrong]}.
^{- By the look of things, they're falling apart and only have themselves to blame!}

---

On a slightly related matter, Brian Brooks ^{[CEO of Binance.US]} has resigned:

• Quote from: https://twitter.com/BrianBrooksUS/status/1423727097323802626
  Greetings #crypto community.  Letting you all know that I have resigned as CEO of ⁦⁦⁦@BinanceUS . Despite differences over strategic direction, I wish my former colleagues much success.  Exciting new things to come!

I don't think it would be such a bad thing. They already have far too much power in the cryptocurrency sphere, from the exchange, to Brave browser, to Coinmarketcap, to their own shitcoins, and so on. One company having so much power over users, what they buy, what they see online, even how coins and exchanges are "ranked", is not a good thing. Having them broken up a bit would be a good thing, in my view. Not to mention that having so many users' data and so many funds being stored by one exchange is a huge target for hackers and a huge security risk.

So the CEO said he would be willing to be replaced by someone with "more regulatory experience"....but the headline kind of makes it sound as if there's going to be an imminent transition of power at Binance, and that doesn't appear to be the case.  He could have been saying that just to sound more pro-regulation in case those regulators are watching what he says (and no doubt they are).  In fact, I'm almost certain that's exactly what's going on here.

I would say this headline is almost clickbait, because the headline doesn't quite match up with what Changpeng Zhao actually said.  Just wait, in two years' time I bet you that he's still the CEO regardless of what kind of regulation Binance is operating under.  Saying you're "very open" to being replaced is a long way away from saying your company is actively seeking a replacement.

Huh.  I wonder what's going on there that the Binance US unit's CEO would step down.  That rarely happens unless something is seriously wrong with the company or it's a ruse, and the CEO was actually fired.

However, you reckon that CZ and Binance would become more proactive in their approach on compliance if the different regulators around the world did not pressure them in their own jurisdictions? I would argue that CZ’s proactiveness is reactive hehehe.

When you put it that way, I guess it's not a bad thing that they're being squeezed out from all sorts of angles.

I was shocked as well and given the fact that they just appointed him back in May ^{[less than four months ago]}, there has to be an underlying reason other than the "strategic differences" and despite claiming that they "operate independently", I wouldn't be surprised if it had something to do with Binance holdings as a whole.

No, of course not. They have been evading regulations and governments since their inception, moving their headquarters God knows how many times (China, Japan, Taiwan, Malta, Bermuda, Cayman Islands, Seychelles, Jersey...) to try to avoid various rules and requirements. Obviously, things have finally caught up with them, with multiple jurisdictions restricting some aspects of their business or banning them altogether. So know they are trying to be seen as being "proactive" and complying with everything left, right, and center, in an effort to retain their customers and maintain their profits.

My guess is that Brooks came in with a view to try to sort things out and comply with regulations, has realized with a complete shitshow Binance actually is, and has decided to get out before he gets too involved and becomes liable for any of the mess he inherited or left behind. Not a great look for Binance.

Probably not. I think crypto exchanges have attracted too much money from various investors around the world for governments and regulators to stop ignoring them. Dealing with cryptocurrencies is like dealing in the Wild West. Exchanges engage in practices and offer products that would be disallowed in the world of the stock market.

Exchanges often comingle customer money with their own, they list coins in a non-transparent way. Some of the shady exchanges have fake volumes and allow traders to engage in practices that can reasonably be described as market manipulation.

I suspect that governments will regulate crypto exchanges in ways similar to how they regulate other financial markets. Regulators may have slightly different rules for crypto exchanges, but there will be regulations. Those exchanges that try to hide from regulators by doing things such as moving their headquarters repeatedly, or not allowing customers from major markets due to regulation, will eventually die out. They will be replaced by exchanges that are willing to follow regulations.

Another person who was also formerly with government has also resigned from a position from a cryptocoin exchange. Brett Redfearn was a former SEC director before he was hired to be Coinbase head of capital markets.

Is this only coincidence? I speculate these former directors and comptrollers of government were hired for their connections, however, when the DOJ began its move against the cryptospace, the exchanges might have recognized that these people are not the type of executives who could save them.



Brett Redfearn, a luminary of the market structure world and former director at the Securities and Exchange Commission, has left his post at Coinbase after only four months with the cryptocurrency exchange.

Source https://www.theblockcrypto.com/amp/linked/113978/former-sec-director-brett-redfearn-leaves-coinbase-after-four-months

I don't think there is anybody who can "save them", regardless of their connections. The government want to heavily regulate and tax cryptocurrencies and associated businesses, and it doesn't matter if their executive officers used to work for the government or not.

I think, more likely, is that Brooks and now Redfearn chose to leave, rather than being fired or forced out. I suspect they are well aware of how the government operates in these matters, can see what is on the horizon for these exchanges, and don't want to be around when the shit hits the fan, so to speak.

@o_e_l_e_o. Why were they hired? Was it not because of their experience in government and their knowledge in maneuvering regulations and the political connections they created throughout their careers? Also, yes they were not fired, however, I speculate that it might be a separation of mutual consent offered first by the exchanges.

Typically speaking, a former regulator is hired for their connections to other regulators. This enables companies to foster better relationships with regulators and to gain advice as to how to incrementally reduce scrutiny from regulators.

Bitcoin-related companies are currently not regulated. So there is no "department" or group of government employees that typically oversees an industry that a previous government employee has contacts with. Similarly, no one who used to work at a regulatory agency will know the type of things said agency will want to look at once they start overseeing bitcoin-related companies.

The above reason is why bitcoin-related companies will gain minimal value from hiring people who have recently worked for regulatory agencies. Companies such as Coinbase will be better off hiring people who have worked at fintech firms that have experience dealing with regulators, rather than former regulators themselves.

Perhaps. Perhaps exchanges initially did mistakenly think that such individuals could indeed "maneuver" around rules and regulations, but as the US government continues to push for more and more aggressive regulations (such as those in the Infrastructure Bill currently going through Congress), they realized that such efforts were futile.

Sure, but I speculate it is the other way around. He's not the first executive officer to resign from Binance, and he won't be the last. Although I can't find a source for these claims, various news articles are claiming things such as this:


Still, does it really matter? Whether he resigned or he was fired or whatever else, a CEO leaving after 3 months in the role is hardly a good sign. Combine this with CZ's tweet from above, and things are obviously not going well for Binance.

I'm hoping it'll be a case of necessity spurring innovation.  If centralised exchanges start to buckle under regulatory pressures, hopefully some bigger breakthroughs will be made with DEX (and by that I mean as though it were a universal protocol, not just a gimmick to sell crappy tokens).

I think that exchanges just tried to mimic other businesses, from the pharmaceutical to oil to military and even IT&C a lot of companies apply the same tactic, they hire people who have some sort of connection to lobby for their interest, not for their qualities in the job they occupy but strictly for their influence. When they realized they will not be able to achieve their goals and they don't have the power to change anything it went probably like bbc.reporter said, you can't help us, then here is a goodbye gift and bye!

But I doubt it was in order to protect a certain company from regulation and more to try and persuade the legislators into drafting a favorable bill on the whole, the timing between their leave and the "infrastructure bill" is intriguing and a bit unsettling, even unsuccessfully they still have connections, so it might be possible that a storm is brewing and they don't want to be caught on the wrong side. Remember that their main selling point is their reputation, if they are seen as unable to do stuff this drops to zero and no company wants a loser lobbyist.

We might never know the truth.

I speculate that those articles were written that way to save those people’s reputations and to show the truth that both parties did not do anything wrong with the other. It is a simple press release informing the public and to avoid controversy.

Binance has hired another expert in market regulations for its exchange in the jurisdiction of Singapore. How many months should we give him? I reckon not more than 6 months particularly if the cryptomarket continues the pattern of the bubble bursting every 4 years.



Binance Hires Former Abu Dhabi Global Market Head as Singapore CEO

The move provides an opportunity for to get ahead of the regulatory curve – a sore point for the exchange in recent weeks.

Binance has hired Richard Teng, the former CEO of Abu Dhabi’s financial watchdog, to head the exchange’s operations in Singapore, the company said in a press release on Monday.

Teng spent six years at the Financial Services Regulatory Authority at Abu Dhabi Global Market as its head.
He also spent seven years as the chief regulatory officer of the Singapore exchange and 13 years with the Money Authority of Singapore, according to his Linkedin profile.

Source https://www.coindesk.com/binance-singapore-hires-richard-teng-former-ceo-abu-dhabi-global-markets