On 21 Nov 2023, Coinbase Co-Founder and CEO Brian Armstrong spoke to CNBC’s Kate Rooney in the aftermath of Binance pleading guilty and agreeing to “pay over $4 billion to resolve the Justice Department’s investigation into violations related to the Bank Secrecy Act (BSA), failure to register as a money transmitting business, and the International Emergency Economic Powers Act (IEEPA)” as well as Binance Co-Founder Changpeng Zhao (better known in the crypto community by his nickname “CZ”) also pleading guilty to “failing to maintain an effective anti-money laundering (AML) program, in violation of the BSA” and having to resign from his position as CEO of Binance.
Armstrong emphasized that Coinbase has always prioritized compliance, a strategy that has sometimes been challenging, especially when competitors offered products that Coinbase deemed legally questionable. He views the recent regulatory actions as a step towards creating a level playing field in the industry, emphasizing the importance of adhering to laws around anti-money laundering (AML) and Know Your Customer (KYC) regulations.
Addressing concerns about the misuse of cryptocurrencies for illicit activities, Armstrong pointed out that, according to third-party data, less than 1% of crypto transactions are for illicit purposes, compared to about 4% for U.S. dollar cash transactions. He stressed the importance of strong transaction monitoring programs and compliance with existing financial service rules, especially for centralized services like exchanges.
Armstrong also touched on the need for regulatory clarity, particularly in areas where the law is still ambiguous, such as the classification of certain crypto assets as commodities or securities. He expressed confidence that the U.S. would eventually establish clear regulations, noting ongoing legislative efforts and the role of case law in providing clarity in the interim.
Discussing Coinbase’s own legal challenges with the SEC, Armstrong differentiated Coinbase’s civil case, which revolves around technical issues of asset classification, from Binance’s criminal case. He highlighted the widespread use of crypto, with 52 million Americans and approximately 400 million people globally using the technology. Armstrong concluded by emphasizing the potential of cryptocurrency to modernize the financial system, making it more efficient, equitable, and globally accessible.
Shortly after the Office of Public Affairs of the U.S. Department of Justice issued a press release that announced that Binance and CZ had pleaded guilty, CZ posted a heartfelt statement to social media platform X, in which he reflected on the emotional challenge of stepping down but affirmed his belief that it was the right decision. Acknowledging his mistakes, CZ emphasized his responsibility to the Binance community and the need for accountability.
CZ expressed confidence in Binance’s growth and future, highlighting the company’s evolution from its nascent stages to a robust entity. He introduced Richard Teng, the former Global Head of Regional Markets at Binance, as his successor. Teng, with over thirty years of experience in financial services and regulatory roles, is set to lead Binance through its next growth phase, focusing on security, transparency, compliance, and expansion.
Before joining Binance, Richard Teng held significant positions, including CEO of the Financial Services Regulatory Authority at Abu Dhabi Global Market (ADGM), Chief Regulatory Officer at the Singapore Exchange (SGX), and Director of Corporate Finance at the Monetary Authority of Singapore. CZ’s confidence in Teng and the Binance team is evident, as he looks forward to the company’s continued success in the cryptocurrency industry.
CZ plans to take a break, his first in over six years, to disconnect and rejuvenate. Post-break, he intends to engage in passive investing, focusing on startups in blockchain, Web3, DeFi, AI, and biotech. He expressed a keen interest in exploring DeFi more deeply. While ruling out leading a startup again, CZ is open to mentoring emerging entrepreneurs, sharing his experiences and lessons learned.
He also highlighted the resolutions with U.S. agencies, noting that they did not allege misappropriation of user funds or market manipulation by Binance, reassuring users that their funds are safe.
CZ concluded his statement by expressing enthusiasm for Binance’s new leadership under Richard Teng and encouraged the community to support him in his new role.
Featured Image via Coinbase
