Binance Bans Former CEO CZ for Life From Managing the Exchange but There’s a Catch
Ex-Binance CEO CZ Will be Released Later This Month. | Credit: Pedro Fiúza/NurPhoto via Getty Images
Key Takeaways
- Binance CEO Richard Teng confirmed that former CEO Changpeng Zhao is banned from managing the crypto exchange for life.
- CZ is set to be released from prison on Sept. 29.
- CZ might be barred from holding the CEO position of Binance, but he will still have a say as the largest shareholder.
Binance co-founder and former CEO Changpeng Zhao, will be released from prison on Sept. 29. However, current CEO Richard Teng confirmed that post-release, the former CEO won’t be able to hold any crucial positions in the exchange.
Early reports based on the United States Department of Justice (DoJ) plea deal suggested CZ might be barred from holding any key position for three years.
CZ’s Role is Limited to ‘Day-to-Day’ Tasks but Remains Influential
Binance’s former CEO, CZ, might not have a say in Binance’s daily work. However, as the company’s largest shareholder, he still has a say in its decisions.
“As a shareholder, he will be looking at the performance of the company, and if things are not up to what he expects, as an investor, it’s always his right to replace, nominate a new board of directors, or a new CEO… shareholders can also always table a resolution,” said Teng.
The US DoJ plea deal made significant organizational changes within Binance. Previously, CZ was the board’s sole member, but the crypto exchange appointed seven board members after the DoJ intervention.
Teng noted that the DoJ plea deal leaves much room for interpretation. So, despite being barred for life, CZ might have a greater say as the largest shareholder.
DoJ Appointed External Monitors May Keep a Check on CZ’s Power
After the plea deal, the US DoJ appointed two external monitors to the seven board members. These DoJ-appointed board members are responsible for monitoring the exchange’s compliance for three to five years.
Yesha Yadav, Vanderbilt University law professor, told Axios that the role of these monitors will be crucial and have a big impact “to act as a check and balance to support the board and will have discretion when it comes to CZ’s role as a very important shareholder.”
While the intrigue surrounding CZ’s role in Binance after his release might be a topic of discussion for the crypto community. CZ himself had cleared that he had no intention of returning as CEO. In April, CZ said he would rather focus on investing in blockchain, artificial intelligence, and other nascent technologies.
CZ’s Power Over Binance
Binance is one of the largest crypto exchanges in terms of trading volume, with operations worldwide. The crypto platform has multiple subsidiaries in different countries based on local law requirements.
At a time when CZ’s role and influence over day-to-day operations are being discussed, it is important to note that a similar power tussle arose with Biannce’s now-defunct US subsidiary. On paper, Binance claimed that its US subsidiary was independent, and CZ had no say in its operations.
However, in the run-up to the regulatory action against Binance, it was revealed that CZ was the majority shareholder in the US subsidiary. Thus, despite showing otherwise on paper, CZ had a big say in its operations.
