Illustration of Cryptocurrency Leaders Face Legal Battles: What's Next?

Cryptocurrency Leaders Face Legal Battles: What’s Next?

Earlier this year, Binance founder Changpeng Zhao, known as “CZ,” was sentenced to four months in prison for permitting widespread money laundering on his cryptocurrency exchange, the largest in the world.

In November 2023, both Binance and Zhao, who was the CEO at the time, admitted to money laundering charges for allowing transactions that violated US sanctions. The settlement included Binance agreeing to pay $4.3 billion in fines and Zhao personally agreeing to pay a $50 million fine and resign from his position.

Richard Teng, previously Binance’s regional markets head and a former Abu Dhabi regulator, has since taken over as CEO. Teng is implementing significant changes, including securing a physical headquarters, a departure from Binance’s earlier belief that a decentralized company does not require an office. This move could indicate to authorities that Binance is restructuring after Zhao’s departure.

On another front, Terraform Labs’ co-founder Do Kwon, once a prominent figure in the crypto industry, is awaiting extradition to either the U.S. or South Korea, where he faces charges.

Terraform Labs faced a major collapse in 2022, profoundly impacting the crypto market. Terraform’s stablecoin, TerraUSD (UST), was pegged to the cryptocurrency Terra (LUNA). However, in May 2022, the value of LUNA dropped from over $120 per coin to practically zero, causing a loss of over $50 billion in UST/LUNA market capitalization and resulting in a $400 billion crash across the broader crypto market.

The U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Terraform and Kwon for allegedly deceptive promotion and sale of crypto tokens, focusing particularly on the algorithmic stablecoin TerraUSD (UST).

Kwon was arrested in March 2023 while attempting to leave Montenegro with forged travel documents. Earlier this year, he agreed to pay $4.47 billion to resolve a civil lawsuit filed by the SEC.

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