Yes, Changpeng “CZ” Zhao has resigned as CEO of Binance after the company pleaded guilty to federal charges of money laundering and was fined $4.3 billion. And yes, this turn of events has further eroded confidence in the world’s biggest crypto exchange. But Binance responded quickly with the promotion of Richard Teng, a former finance regulator, as CEO.
Teng is a former head of the Abu Dhabi Global Market, the UAE capital’s financial services regulator, and a past director of corporate finance at the Monetary Authority of Singapore. Most recently, he was the global head of regional markets at Binance.
Clearly Binance believes Teng’s appointment will steer it toward the right path and win back customer trust. But Teng, who joined Binance in 2021 as Singapore CEO, has a hard job ahead. The exchange’s native token, BNB, is down 15% after Zhao’s resignation, an indicator of shrinking customer confidence. Users withdrew a net $1.3 billion from the Binance platform, with other cryptocurrencies and blockchain protocols such as Solana and Polygon also getting a hit.
Binance’s crypto assets are under threat
Binance holds around $2.8 billion worth of BNB tokens, according to blockchain analytics platform Nansen, and the exchange maintains $67 billion worth of assets—but that amount is now threatened by the recent reputational hit. Riyad Carey, a research analyst at Kaiko, told Bloomberg there was “an initial reaction to the news where liquidity dropped 40%.”
US Treasury secretary Janet Yellen accused Binance of lying to the Securities and Exchange Commission (SEC) and concealing information from financial law enforcers. “Our work revealed that Binance claimed to have exited the US market years ago, but actually did not,” she said. Binance’s tendency to circumvent regulatory environments has previously been compared to FTX. (FTX’s recently convicted founder Sam Bankman-Fried is awaiting sentencing and could remain behind bars for 110 years.)
US attorney general Merrick Garland said that Binance’s rise to the top of the global crypto market was fueled in part by “the crimes it committed” in pursuit of profit. “The message here should be clear: using new technology to break the law does not make you a disruptor, it makes you a criminal,” Merrick added.
Richard Teng’s job of reclaiming Binance’s reputation is a tough one
Teng’s first mandate will be to try to reconstruct the company’s defaced public image. He said in an X post that his focus is on restoring the confidence of the exchange’s 150 million users by reassuring them of the “financial strength, security and safety” of the company. His other big areas of focus will be “collaborating with regulators to uphold high standards globally” and “working with partners to drive growth and adoption of Web3.”
Compliance experts say that despite Teng’s experience in financial markets regulation and compliance, customers and regulators alike will be understandably skeptical. “There’s a lot of work to be done in radically re-imagining the operating and governance model for Binance,” law professor Yesha Yadav told Bloomberg. Hirander Misra, CEO of London-based market infrastructure company GMEX told the publication that Teng is “swimming against the tide,” because “a culture of regulatory compliance is very hard to instill in an organization that has evolved in an industry with a lack of regulations.” Misra also thinks Yi He, Zhao’s Binance co-founder, could now be pulling the strings and make Teng’s job more difficult.
As the SEC continues to closely monitor Binance’s operations, Teng also faces the task of stemming the decline in the exchange’s crypto dominance. That will involve fending off more exits by senior Binance personnel and bringing in fresh talent to help navigate the regulatory crisis.