Binance Facing Leadership Crisis as Top Execs Quit: Should Exchange Users be Worried?
Was Binance the first?| Credit: Shutterstock
Key Takeaways
- Binance execs quit one after another
- The company’s founder is preparing for potential federal lawsuits
- Similar quitting patterns were seen with FTX and Celsius
Multiple high-level executives have announced their departure from Binance. The announcement comes as the company is facing serious legal challenges posed by the US Securities and Exchange Commission. The exchange and its founder Changpeng Zhao are expecting potential federal charges, evident from the preparations CZ has put forth.
This pattern has been seen on several occasions, especially with collapsing crypto companies, where the top management jumps ship before it drowns.
What does it mean for CZ? More importantly, what does it mean for Binance users?
Mass Exodus
According to reports , Binance CEO Changpeng Zhao said that general counsel Hon Ng, chief strategy officer Patrick Hillmann, and SVP for Compliance Steven Christie will be leaving Binance.
Hillmann even took to Twitter to announce his resignation. The former strategy officer said, “It’s true that I am leaving @Binance, but I’m doing so on good terms. I continue to respect and support @cz_binance and am grateful for having had the incredible opportunity to work under his leadership.“
He cited his main reason for departure was personal, as he and his wife are expecting a child.
“My wife is literally going to give birth to our second child any hour now (literally), so the time is right for me to step aside. I will continue to cheer on my colleagues at Binance and support this industry as it matures and evolves.”
But, the last sentence in his tweet evoked some reactions from followers, where he said, “Blockchain and crypto is here to stay, and I am excited to watch it explode in the years ahead.” While the statement is meant to project optimism, several people considered it a bad omen for the industry.
The news of these executives quitting comes shortly after Matthew Price his exit from Binance. Price is a former IRS agent hired by Binance to manage international investigations.
The mass exodus can hardly be seen as a series of coincidences. It would also be remiss not to point out the overlapping timing with Binance’s current legal problems.
Binance In The Crosshairs
Binance is now facing thirteen lawsuits filed by the SEC. The list of charges could potentially lead to the end of the global exchange. Among the list of charges are wash trading, evading US regulators, commingling customer funds, and artificially inflating trading sums.
Even more alarming is that crypto legal experts predict that Binance and CZ might soon be facing federal charges following the SEC lawsuits. And CZ’s recent hires may lead everyone to predict the same.
Binance and CZ hired several former SEC Enforcement directors and DOJ prosecutors. Who would be better to help the exchange with a potential DOJ lawsuit?
Binance’s troubles don’t just stop there. The exchange is facing a forced exit from Europe as well. Binance has already unregistered from Cyprus, the Netherlands, and the UK. The company is also struggling to find a banking partner in Germany. On top of all of that, Binance is currently under investigation by French authorities.
Users, so far, may withdraw their tokens from the platform. However, Binance halted all USD transactions a while back. The company also suspended all OTC trades and key trade pairs.
At this point, who can blame the executives mentioned above for jumping an obviously drowning ship? Does this mean a potential end to Binance?
Other Pre-collapse Resignations
Two key figures in the crypto world were seen doing the same thing as their respective crypto companies were collapsing, FTX’s Sam Bankman-Fried & Celsius’ Alex Mashinsky. Both individuals were CEOs of their respective companies who announced their resignations as they filed for their companies’ bankruptcy.
Unlike Binance’s execs, however, Bankman-Fried and Mashinsky failed to escape legal scrutiny by simply abandoning their posts.
As it stands, the former FTX CEO is now in the US awaiting a court date where he will be facing nine federal charges, including defrauding the US government.
While Mashinsky is yet to face such legal challenges, the CFTC has concluded the former Celsius CEO has indeed broken the rules and lied to investors on his platform. Mashinsky’s fate awaits a potential majority agreement on such a conclusion which could lead to a potential federal case.
