The explosive growth and success of Binance outside of the control of traditional financial and political establishments led to heavy-handed enforcement actions against the exchange, according to former BitMEX CEO Arthur Hayes.
Hayes delved into the recent $4.3 billion settlement paid out by Binance in a lengthy Substack blog. This comes after the exchange and its founder, Changpeng “CZ” Zhao, admitted to violating United States laws around money laundering and terror financing.
As Hayes highlights, CZ’s global exchange became the largest by trading volume in the six years since its inception in 2017. The former BitMEX CEO points out that Binance would also be rated in the top 10 traditional exchanges by average daily volume, which is indicative of its growing influence on a global scale.
“The problem for the financial and political establishment was that the intermediaries facilitating flows into and out of the industrial revolution named blockchain were not run by members of their class,” Hayes opined.
Binance challenged the status quo
The former BitMEX CEO, who himself fell foul of violating United States Bank Secrecy Act (BSA) regulations after the exchange failed to implement adequate KYC procedures, highlighted Binance’s role in allowing everyday people to own intermediaries and cryptocurrency assets without needing traditional players.
“Never before had people been able to own a piece of an industrial revolution in under ten minutes via desktop and mobile trading apps.”
Hayes adds that from a fundamental standpoint, centralized exchanges used tools of the state, the company and legal structures to “disintermediate the very institutions that were supposed to run the global financial and political system”.
“How dearly did CZ pay? CZ – and by extension, Binance – paid the largest corporate fine in Pax Americana history.”
Hayes then makes reference to a number of high profile mainstream banking scandals as well as the 2008 global financial crisis and subsequent ‘Great Recession’ which was directly attributed to the collapse of the U.S. housing market.
The US and China are kinda sorta friends again. How does this new found love translate into stacking sats? Read “Panda Power” for my take. Bonus feature: a small riff on the #BENANCE situation.https://t.co/ohSBPPhJyz pic.twitter.com/vKBPjMZ0Ce
— Arthur Hayes (@CryptoHayes) November 28, 2023
In the majority of these instances, mainstream banking and financial institutions were…
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