Home Blockchain Legal Woes of Former Binance CEO Spotlight Trust Issues in the Crypto Industry

Legal Woes of Former Binance CEO Spotlight Trust Issues in the Crypto Industry

Legal Woes of Former Binance CEO Spotlight Trust Issues in the Crypto Industry

Jimmy Aki

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| 2 min read

trust in crypto

Image by Jimmy Aki, Midjourney

On February 25, renowned crypto attorney Steven Nerayoff expressed concerns that the legal challenges faced by former Binance CEO and founder Changpeng Zhao could cause trust issues in the crypto industry.

Changpeng Zhao’s (CZ) trial has taken a new turn in the last few days. Reports indicate that the United States Attorney’s Office advocates for stricter bond conditions. These conditions require CZ to surrender his Canadian passports before sentencing on April 30.

CZ’s Trials Can Damage Trust

The US government formally requested that the court mandate CZ to regularly provide three days’ advance notice whenever he travels within the continental US.

These additional travel restrictions have drawn the attention of popular crypto attorney Nerayoff. He implied that the legal dispute between CZ and the US could have a more profound and wider impact on the crypto industry.

According to a post on X (formerly Twitter), Nerayoff noted that the legal issue could “damage trust in the cryptocurrency industry.”

In providing context to his statement, Nerayoff revealed that there are speculations that CZ played a crucial role in exposing and subsequently causing the collapse of his close rival, Sam Bankman-Fried (SBF), and the FTX crypto exchange. Given this speculation, many believe the US Department of Justice (DoJ) is working hard to ensure CZ faces imprisonment.

Nerayoff stated that the reason behind these speculations is that many believe SBF’s crypto operations were a backchannel for funneling money to politicians and other influential figures. CZ’s alleged role in the entire situation has sparked the outrage of these influential personalities who want him to spend time behind bars.

For context, the former Binance CEO has been on trial for failing to maintain an effective anti-money laundering program on the centralized crypto trading platform.

As part of the settlement agreement, the Binance exchange was penalized a total value of $4.3 billion in late 2023. CZ was then asked to step down from his position as the CEO. He was also indicted for violating US Bank Secrecy Act (BSA) and fined $175 million as part of his bail conditions.

Additionally, the former CEO’s continued tussle with regulators is closely tied to his request to leave the US pending the time of his trial. Recall that his previous request to travel to the United Arab Emirates (UAE) to visit his family was also denied.

Terra Founder Do Kwon Facing US Extradition

The last two years have been a mix of macro and industry-related events for the crypto space. In 2022, the full onslaught of the crypto winter was heralded as the emerging market ecosystem plummeted 50% of its $3 trillion market cap.

The collapse of the Terra blockchain in May of that year catalyzed a full-blown crypto version of market depression. After a two-year legal tussle, Terra Blockchain’s founder and creator, Do Kwon, is set to be extradited to the US to face criminal charges.

The collapse of the Terra blockchain saw investors lose a whopping $40 billion in a few months as Kwon went into hiding. However, the South Korean government has since tracked him down, and he is set for an official handover to US authorities in the coming months.

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