Besides famous names like Changpeng Zhao and Sam Bankman-Fried, many founders and CEOs of other digital currency companies are also being closely monitored by US regulators.
On November 22, Mr. Changpeng Zhao (CZ) announced that he left Binance pleaded guilty to violating anti-money laundering laws, and paid a fine of 4.3 billion USD according to an agreement with the US government so that the digital currency exchange could continue.
However, CZ is not the only one caught in the crosshairs of regulators. As token prices plummeted last year, the cryptocurrency market saw a staggering crisis that left industry leaders in a difficult position. Being investigated and accused does not mean they have committed wrongdoing or will be convicted. These people all deny the accusations made by the US.
Changpeng ‘CZ’ Zhao
CZ was born and raised in China, moving to Canada at the age of 12. He founded Binance in Shanghai (China) in 2017 but later moved the exchange to Tokyo and then Malta, Binance’s parent company is located in the Cayman Islands. Company records show that this billionaire owns many properties in Singapore and the high-end Burj Khalifa tower in Dubai but rarely flaunts his wealth.
In addition to the settlement with the US Department of Justice (DOJ), Commodity Futures Trading Commission (CFTC), and the US Department of Treasury, the platform also faces other difficulties. The US Securities and Exchange Commission (SEC) sued Binance and CZ for operating a fraudulent website in June. The SEC accused Binance of falsifying trading volumes, redirecting customer funds, not restricting US customers from using the platform, and misleading investors about market surveillance controls.
Binance said the SEC’s lawsuit is not justified based on facts, law, or the commission’s own precedent.
In November, a jury in New York (USA) convicted former FTX CEO Bankman-Fried of defrauding customers and investors of at least $10 billion.
Bankman-Fried said he made mistakes when running FTX but did not defraud customers. This is a criminal case that shocked the cryptocurrency industry. Before being convicted, Bankman-Fried was a famous figure in the cryptocurrency world. The FTX exchange he founded was once considered the second-largest digital currency exchange in the world.
Do Kwon is the co-founder of Terraform Labs and develops the TerraUSD digital currencies with Luna. The market value of TerraUSD and Luna was once estimated at more than $40 billion and their collapse left millions of investors bankrupt.
Authorities said Kwon faces multiple fraud charges in the US and was arrested in Montenegro in early 2023 for allegedly falsifying documents and the SEC also filed civil charges against Kwon and Terraform Labs, accusing the two of orchestrating a multibillion-dollar cryptocurrency scam.
According to a press release from the Montenegrin court, Kwon denied forging documents. In a court filing dated October 30, Terraform said the SEC could not provide evidence to prove that Do Kwon and Terraform were fraudulent.
In July 2022, founder and former CEO of cryptocurrency company Celsius Network Alex Mashinsky filed for bankruptcy. The New York Judicial Authority (USA) sued Mashinsky for fraud in January. Mashinsky’s lawyer said the former CEO refused to plead guilty and wanted to defend himself in court.
In addition, Mashinsky also faces lawsuits from the SEC, CFTC, and the US Federal Trade Commission (FTC), alleging that he misrepresented the company’s true status.
Silbert is the head of the digital currency group Digital Currency Group (DCG), which owns the Genesis company that filed for bankruptcy in January 2023. Mr. Silbert was accused of defrauding customers of more than $1 billion with Genesis and DCG. Mr Silbert said the allegations were baseless and would fight the case in court.
Stephen Ehrlich’s cryptocurrency company Voyager Digital was greatly affected by the 2022 cryptocurrency crisis. Faced with accusations of misleading customers by the CFTC and FTC, Mr. Ehrlich said he was used as a “scapegoat” for the bad actions of other companies.
In March, the SEC sued Chinese cryptocurrency entrepreneur Justin Sun and his companies, including the Tron Foundation, for fraud. The SEC said Justin Sun falsified trading volumes for the company’s digital currency tokens and hid celebrity payments to promote them. Mr. Sun said in a post on platform X that the SEC’s complaint was unfounded.