Currently serving a four-month prison sentence for violating anti-money laundering laws, Changpeng Zhao (CZ), the former CEO of Binance, a top bitcoin exchange,CZ’s authority over Binance Coin (BNB), the native token of the platform, is still strong even behind incarceration.
A new Forbes article claims that CZ owns over 64% of BNB’s circulating supply, or roughly 94 million tokens. This great ownership begs problems over BNB’s ability to overcome the legal obstacles related to Binance.
The Double-Edged Sword Of Dominant Ownership
CZ’s significant BNB ownership has benefits as well as drawbacks. It highlights the token’s success, on the one hand. Essential to the Binance ecosystem, BNB facilitates transactions, grants discounts, and grants access to token sales.
Reflecting its great utility and market demand, its value has skyrocketed; the price rises from $290 in January 2024 to a peak of $724 in June. With a projected net value of $33 billion, this achievement has significantly raised Binance’s valuation and made CZ the 24th richest person in the world. .
BNB price action in the last 24 hours. Source: CoinMarketCap
Zhao’s strong ownership, meanwhile, begs questions regarding decentralisation as well. A basic tenet of cryptocurrencies is the dispersion of power outside of centralised bodies. Given that one person owns a large share of BNB, there remain unresolved issues regarding the token’s susceptibility to manipulation and its possible autonomous asset capability.
The Shadow Of Legal Troubles
Legal problems of Zhao’z cloud Binance’s future. The US Department of Justice (DOJ) charged the trade for allegedly breaking rules on money laundering and sanctions in 2023. CZ resigned as CEO and Binance paid a hefty $4.3 billion punishment, but the harm to reputation is really noticeable.
Regulatory Scrutiny And Its Impacts
This regulatory control might affect Binance’s operations and customer base. Concerned about the legal issues of the exchange, investors can move their assets to different platforms. Moreover, more stringent rules would limit Binance’s capacity to provide some goods and services, therefore hindering its expansion.
The Uncertain Future Of BNB
Although Binance’s recent price surge shows resiliency, the future of BNB is yet unknown. Long-term consequences of Binance’s legal issues are now unknown. The changing legal environment for cryptocurrencies will be crucial since Binance and BNB could find great challenges from a stricter regulatory posture.
CZ stays a big shareholder in Binance despite his jail term, hence his continuous involvement—even from behind bars—may have an impact on investor trust.
Moreover, weathering regulatory storms will depend critically on Binance’s capacity for innovation and outside-of-BNV expansion. The company’s ability to diversify its goods and services will define its resilience and capacity to negotiate the ever convoluted terrain of bitcoin control.
Featured image from Getty Images, chart from TradingView