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Changpeng “CZ” Zhao, Binance's former CEO, announced a new education-focused crypto and blockchain project, marking his return to the public eye while he is facing ongoing legal challenges. Despite these personal legal issues and Binance facing significant regulatory scrutiny, the exchange has shown remarkable growth, with assets under custody soaring to over $100 billion. Binance has also launched an initiative offering rewards for information on insider trading or corruption, after controversy over the listing of the Solana-based memecoin Book of Meme (BOME) and subsequent insider trading allegations, which the exchange is actively investigating.
CZ Reveals New Crypto Venture
Changpeng “CZ” Zhao, the former CEO of Binance has once again caught the attention of the public with a recent announcement on X about a new, education-focused project that dives into the realms of cryptocurrency or blockchain technology without introducing any new tokens. This declaration came as something of a surprise given Zhao's recent legal challenges and relative silence on social media platforms.
In November of 2023, Zhao resigned from his position at Binance as part of a plea agreement with U.S. authorities, which also saw Binance agreeing to a very hefty $4.3 billion settlement over charges related to failing to implement an effective Anti-Money Laundering program.
Zhao, who has been staying in the U.S. on a $175 million bail, is expected to return to court on Apr. 30 for sentencing after pleading guilty to a felony charge. Speculations suggest he could face a prison term ranging from 12 to 18 months. Despite these legal entanglements, Zhao's post still hinted at his ongoing interest in the crypto sector, though details of the project are still pretty scarce at this stage.
Binance itself is also still grappling with a number of legal battles. One lawsuit in particular, filed by the U.S. Securities and Exchange Commission (SEC) in June of 2023, is being described as a "near-mortal blow."
Binance Thrives Amid DOJ Scrutiny
Despite facing SEC scrutiny and legal turmoil, Binance continues to grow. In fact, Binance has shown remarkable resilience in the face of a series of actions taken by the United States Department of Justice against both the exchange and Changpeng Zhao.
As of Mar. 18, the assets under custody at Binance soared to more than $100 billion, a massive increase from $40 billion at the start of the year. This growth could certainly be attributed to a recent surge in crypto prices, which gave the value of user assets under Binance's custody a very nice boost.
Binance is also still committed to securing user funds as all user assets are held at a 1:1 ratio with additional reserves, a claim verifiable through its proof-of-reserves (POR) system. The POR system reportedly shows over 100% collateralization ratios for all major cryptocurrencies and altcoins. However, some experts have cautioned that proofs-of-reserves may not provide a complete picture of an exchange's financial health, as they do not account for liabilities in calculating net equity. In response, Richard Teng, CEO of Binance, has asserted that the exchange operates a "debt-free" capital structure.
Despite these assurances, the exchange acknowledges that the figures provided by blockchain market intelligence firms might not fully capture the extent of user funds on Binance, as they include Binance’s operational funds. The most accurate data on user asset holdings, according to Binance, comes from its monthly POR audits.
In a separate move, Binance also recently announced its decision to sever ties with its venture capital arm, Binance Labs. Despite Binance Labs achieving an average return of over 14x on its investments and its portfolio now valued at $10 billion, Binance clarified that Binance Labs is only licensed to use its trademark and does not have any other relationship with the Binance exchange or any affiliated businesses or entities.
Binance Offers Millions for Insider Trading Tips
Binance is also making moves by offering a reward ranging from $100,000 to $5 million for reports of insider trading or corruption in the exchange. This announcement came in the wake of some controversy surrounding the listing of the Solana-based memecoin Book of Meme (BOME), which was paired with Bitcoin, Tether, First Digital USD, and the Turkish lira on Mar. 16. Additionally, Binance Futures introduced a BOME perpetual contract with up to 50x leverage.
Before Binance's listing, a big transaction caught the community's attention when a crypto whale purchased 314 million BOME tokens for $2.3 million on the Raydium decentralized exchange, at an average price of $0.0074 per token. After the listing, the token's value surged to $0.026, raising the total value of the tokens to approximately $8 million. This incident led to suspicions and discussions in the crypto community, with some people even speculating that the trade could be a result of insider information.
In response to these allegations, Binance launched an investigation and stated that the individual in question had no ties to the exchange at all. The platform also encouraged the community to report any suspicious activities, promising to keep the informants' identities confidential and to share the outcomes of their investigations publicly.
It is worth noting that not all traders experienced good outcomes from the BOME listing. One early investor missed out on a huge profit by selling 170 million tokens for $131,000, a day before the price skyrocketed, which would have valued the tokens at $2.3 million at the peak of the frenzy.