The U.S. government has delivered a bold statement to the cryptocurrency world, a sector valued at approximately $1.4 trillion.
While crypto enthusiasts are still reeling from the landmark conviction of Sam Bankman-Fried, the former CEO of the now-defunct FTX exchange, U.S. authorities have stepped up their enforcement efforts. This time, Changpeng Zhao, founder of Binance—the world’s largest crypto exchange—admitted to failing to implement an adequate anti-money laundering framework, which may have enabled illicit money transfers.
Here are five notable takeaways from the record-breaking penalty imposed on a money services business in U.S. history, a case that happens to involve a cryptocurrency company:
1. Rebuilding Crypto’s Reputation Will Take Time
Both Zhao and Bankman-Fried were once prominent figures in the cryptocurrency space. Now, their legal troubles place additional pressure on ethical companies to convince skeptics that such cases are outliers rather than the industry norm.
In light of recent developments, Coinbase CEO Brian Armstrong seized the opportunity to emphasize his platform’s compliance-first approach. Armstrong highlighted Coinbase’s focus on building a sustainable company through adherence to regulations, which he called the “right decision” in a statement shared on X.
Government officials are keen to keep these incidents in the public eye. Attorney General Merrick Garland reinforced this message, stating, “Using new technology to break the law does not make you a disrupter. It makes you a criminal.”
2. Market Reactions Show It’s Not a Repeat of the FTX Collapse
Cryptocurrency prices initially dipped after the Department of Justice announced charges against Zhao, but the market quickly rebounded.
On Tuesday, Binance’s native token dropped by 6%, while Bitcoin and Ethereum fell slightly. However, by Wednesday, Binance Coin recovered by 3.5%, Bitcoin gained 2.4%, and Ethereum rose 5%.
Investors’ optimism seemed driven by reports that Zhao might retain the majority of his Binance shares following the settlement, signaling some stability. Moreover, the conclusion of a lengthy investigation provided relief to market participants.
Despite these developments, 2023 has been a strong year for cryptocurrency overall, with Bitcoin climbing over 120% and Ethereum up nearly 70%.
3. The Feds Are Cracking Down a Lot Harder on Crypto These Days
The announcement underscores the federal government’s aggressive stance on combating illegal activities involving digital assets. Regulatory agencies such as the SEC, CFTC, and Treasury Department have ramped up efforts to address crypto-related violations.
The SEC, for instance, recently sued Kraken, accusing it of running an unregistered securities exchange and mingling customer funds with company assets. Meanwhile, the Department of Justice has its National Cryptocurrency Enforcement Team actively pursuing crypto-related criminal cases.
Attorney General Garland characterized this multi-agency collaboration as a “whole-of-government approach” to tackle corporate misconduct, leveraging both criminal and civil enforcement tools.
This crackdown could have a ripple effect on eCommerce sites such as online casinos that accept crypto payments. However, unlike other countries, such as the UK, where crypto casinos are thriving, most online USA casinos do not accept cryptocurrencies. Due to the strict gambling regulations, online casinos are also only available to players in a few states. Fortunately, with the acceptance of sweepstakes casinos, US players can still enjoy their favorite sweepstakes games, which do not require playing with real money or cryptocurrencies.
4. Binance Is Leaving the U.S., But Not Entirely
As part of the settlement, Binance agreed to cease operations in the U.S. However, users were directed to Binance.US, a separate platform regulated within the United States, which remains functional.
Binance.US, established in 2019, adheres to U.S. regulatory standards, allowing American users to continue trading cryptocurrencies. This platform operates independently of the broader Binance entity and is unaffected by the settlement.
5. Regulatory Reform Remains on the Table
While existing financial laws have proven effective in prosecuting crypto-related crimes, officials are signaling the potential for new regulations.
Deputy Attorney General Lisa Monaco emphasized the government’s commitment to using its full range of tools to address misuse of digital platforms. However, new regulations could provide additional clarity, helping investors and law enforcement distinguish between legitimate platforms and fraudulent schemes.
Calls for comprehensive legislation have been ongoing. Whether through agency-level rulemaking or congressional action, any new framework would likely aim to close existing regulatory gaps. CFTC Chair Rostin Benham has voiced support for congressional involvement to establish guidelines for commodities-based digital tokens.
