Coinbase touts compliance efforts amid Binance fines, CEO exit
Binance paying $4.3 billion in fines and agreeing to have CEO Changpeng Zhao step down after pleading guilty to criminal charges in the U.S. is sure to go down as a seminal moment in the history of crypto. U.S.-based cryptocurrency exchange and Binance rival Coinbase sees it both as a teaching moment and validation of its own approach.
“Since the founding of Coinbase back in 2012 we have taken a long-term view. I knew we needed to embrace compliance to become a generational company that stood the test of time,” Coinbase CEO Brian Armstrong posted to X on Tuesday. “We got the licenses, hired the compliance and legal teams, and made it clear our brand was about trust with our customers and following the rules.”
Binance co-founder Zhao, commonly known as “CZ,” agreed to leave his post as CEO of the company as part of a plea deal with the U.S. Department of Justice, according to court filings unsealed on Tuesday. He is admitting guilt for anti-money laundering violations and will pay a $50 million fine. The world’s largest crypto exchange is pleading guilty to counts of money laundering, conspiracy to conduct an unlicensed money transmitting business, and sanctions violations. Binance will also pay a fine of $1.8 billion plus consent to a forfeiture order requiring it to pay an additional $2.5 billion.
Armstrong’s comments addressed how taking the compliant approach has been a tougher path. “It’s more difficult and expensive to take a compliant approach. You can’t launch every product that customers want when it’s illegal,” he said in his post. “Today’s news reinforces that doing it the hard way was the right decision. We now have an opportunity to start a new chapter for this industry.”
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For its part, Coinbase has not been able to completely avoid regulatory scrutiny and locking horns with the Securities and Exchange Commission. Coinbase and the SEC have been at odds for months, with the agency filing a lawsuit against it for allegedly operating as an unregistered broker and exchange in violation of federal securities laws. The exchange, which generates most of its revenue in the U.S., has been exploring alternative markets amid the increased challenges dealing with U.S. regulators.
Coinbase’s Chief Legal Officer Paul Grewal used the Binance news as an opportunity to point out what he sees as faults in how the U.S. manages the crypto industry.
“The U.S. regulation by enforcement-only approach has only increased consumer risk and driven customers and innovation out of the country,” he posted to X. “Legislation is essential for safeguarding consumers and fostering a responsible marketplace in America.”