LUCKNOW (CoinChapter.com)— Is Binance safe? On Nov. 21, 2023, the US Department of Justice (DOJ) imposed a $4.3 billion penalty on the largest exchange Binance. The CEO of Binance, Changpeng “CZ” Zhao, pleaded guilty to violating US Anti Money Laundering (AML) law. This also made Changpeng “CZ” Zhao stepping down as the CEO.
Is Binance a Safe Crypto Exchange?
The controversy has prompted many to wonder whether or not Binance is a safe crypto exchange. The concerns have mounted further, with the exchange witnessing $2.2 billion in outflows in a day. Atop that, DefiLlama data shows a $566.8 million withdrawal in the same period.
The “is Binance safe” trend could be overblown, given the exchange claims that they stay overcollateralized for major assets, including Bitcoin (BTC), Ethereum (ETH), and Tether (USDT). Simply put, each Binance should theoretically get cash if they want to empty their wallets on the exchange.
Zhao must pay $200 million in civil and criminal penalties. As an early crypto adopter, his net worth varies from $17 million to possibly deca-billions. This amount is relatively small for him to settle charges from a coordinated investigation by the DOJ, CFTC, and two Treasury Department enforcement departments—FinCEN and OFAC.
Binance has gone through several regulatory challenges earlier. It seems that it already had a Plan B in place to ensure that the question “Is Binance safe” has only one answer: No, it isn’t.
Richard Teng, the head of regional markets, will replace Zhao. This quick and expected promotion has helped a lot in mitigating the current situation, particularly in light of the possibility that Zhao may face a federal prison sentence ranging from 18 months to 10 years.
Is There Any Chance for a Fresh Start?
Binance dealt with the situation efficiently. While the firm is facing a substantial penalty, it seems like the exchange is financially strong to weather the storm. Additionally, Binance has to appoint an independent auditor and submit compliance reports to the US government as part of the settlement terms.
If Binance agrees to compensate, complies with the laws, and ends a long-standing criminal investigation, this can give the exchange a chance for a fresh start. That means the “is Binance safe” will eventually be a FUD.
Additionally, European countries like France, the Netherlands, and even tax-friendly Cyprus had previously refused to grant the license to the firm, and even some of them initiated a regulatory investigation. These countries may reconsider and offer the exchange a second chance.
FTX customers rushed to withdraw their funds as soon as they discovered that operators indulged in fraud and embezzlement activity. This led to the downfall of the exchange in a very short period. Binance is one of those forms that took advantage of the downfall of its rival, FTX, attracting a global crypto customer base.
Teng made his first public statement after holding the position of Binance CEO, where he shared some metrics, as shown below.
What Could Happen…?
For now, Binance has to cross several hurdles, including clearing several charges led by the US Securities and Exchange Commission (SEC). Furthermore, the exchange is currently dealing with the impact of the CEO’s resignation.
So, is Bitcoin safe appears like a genuine question.
In October, Binance’s US division, Binance.US, changed its terms of use. These modifications restrict users from withdrawing the US dollar directly from the exchange. Simultaneously, after its former partner Paysafe stopped working with the exchange, Binance onboarded “several new regulated and authorized fiat partners.” This allowed users to deposit and withdraw Euros.
If customers face any inconvenience from these changes, it may kill the exchange. It is still not clear in what way the final result of the DOJ’s investigation, penalties, CEO resignation, and possible imprisonment affect the audience psychologically.
Then, trading on the exchange will be risky. Is Binance safe, then? Definitely not. As a precaution, traders should withdraw their funds.
