First Mover Americas: Binance, Binance, Binance

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Binance, the world's largest crypto exchange, was criminally charged with breaking sanctions and money-transmitting laws and agreed to a $4.3 billion settlement in "one of the largest penalties" the U.S. has ever obtained from a corporate defendant. Founder Changpeng "CZ" Zhao pleaded guilty in Seattle to charges he personally faced, agreeing to pay a $50 million fine and step down as CEO. Richard Teng, a former Abu Dhabi regulator and later Binance's regional markets head, will replace him. Binance was accused of failing to maintain a proper anti-money laundering program, operating an unlicensed money-transmitting business and violating sanctions law, according to a court filing unsealed on Tuesday.

Binance's initial growth was illegally fueled by its U.S. clients, the charging document alleged. In its early days, the exchange relied on Americans for the bulk of its revenue, its trading activity and thus its status as the world's largest crypto exchange. The filing details years of compliance failures and obfuscation in the name of protecting those most valuable – and off-limits – users. But servicing those customers wasn't legal because Binance wasn't a registered U.S. business, according to the government. Binance targeted growth in the country, especially among "VIP" users who drove the exchange's trading volume and thus its revenue, helping it become a crypto-trading juggernaut. According to the government, Binance's executives "tracked and monitored" the exchange's U.S. performance and even touted their success. As much as 30% of the exchange's web traffic (and just as much revenue) originated in the U.S. in early 2018, the filing said.

Following the news, Binance saw over $950 million in net outflows over the past 24 hours. “There are constant hourly net outflows of bitcoin and stablecoins after the CZ's resignation announcement,” Hochan Chung, head of marketing at CryptoQuant, told CoinDesk. “However, compared to the total reserves of Binance, the current volume is not yet significant at all.” Binance is set to continue operating as usual and make a "complete exit" from the U.S market. The withdrawals are above average, but not unusually large on a weekly basis, an analysis of net hourly flows from CryptoQuant shows. Data from a Dune Analytics dashboard shows over $2.37 billion in various tokens left the exchange and some $1.78 billion in tokens were deposited.

- Omkar Godbole