Binance, the world’s largest crypto exchange, and its former CEO Changpeng Zhao (CZ) recently reached an agreement with the United States government.
However, the implications of the agreement are raising eyebrows, with former SEC official John Reed Stark expressing serious concerns about Binance’s future and compliance efforts.
Stark believes that, despite the settlement, CZ’s guilty plea to anti-money laundering charges may not provide Binance with the expected relief.
Stark mentioned an interview with Binance’s new CEO, Richard Teng, in a recent post on X (formerly Twitter). Teng took over after CZ’s guilty plea and a significant $4.3 billion legal settlement with various US regulatory bodies.
Stark highlighted Teng’s interview with Financial Times journalist Scott Chipolina, in which Teng appeared to avoid giving direct answers to basic questions about Binance’s headquarters and auditor.
The importance of these questions was emphasized by Stark, who stated that they pale in comparison to the intense scrutiny that Binance and CZ will face from the US Department of Justice (DOJ) and the Financial Crimes Enforcement Network (FinCEN).
Stark emphasized Binance’s comprehensive cooperation agreements and monitorships with regulatory bodies, implying that Binance’s lack of transparency and resistance to disclosing key details raise red flags.
He questioned Noah Perlman, Binance’s Chief Compliance Officer, and pointed to Teng’s evasive responses during the interview as evidence of resistance to transparency, compliance, and cooperation.
Stark discussed the DOJ and FinCEN’s unprecedented and extensive requirements imposed on Binance, including the appointment of an independent compliance monitor for three years.
He speculated that the monitorship’s undisclosed terms would be onerous and highly invasive, allowing investigative teams to uncover potentially incriminating evidence.
Stark concluded by questioning Teng’s ability to turn Binance from a “historically secretive and non-compliant firm” into a traditional and law-abiding financial entity.
He predicted that the challenges ahead would result in additional charges being filed against Binance and CZ as the investigation and prosecution proceeded, eventually stating that a Binance collapse is unavoidable.
