JPMorgan Says Settlement Positive for Crypto as CZ Released on Bond

Binance and its now ex-CEO, Changpeng Zhao, have dominated the crypto headlines for the past few days. The goliath of the industry reached a settlement earlier this week with United States enforcement, agreeing to pay US$ 4.3 billion (AU$ 6.57 billion) in penalties. This makes it one of the highest-value corporate settlements to ever take place in the nation. CZ himself will be forced to part with US$ 50 million (AU$ 76.42 million) and step down as CEO of Binance as part of the deal. The former CEO also agreed to pay a US$ 175 million (AU$ 267 million) release bond and to return to the United States two weeks prior to his sentencing, which is scheduled for February 23, 2024.

Binance Settlement May Help Avoid FTX 2.0

The massive penalties and crackdown on the industry’s biggest exchange may, at first glance, appear like a bad thing. However, one only needs to look at the market’s performance since the fines were handed down to see that investor sentiment hasn’t really been impacted by the news. Most coins are down in value on the week, but within a normal range given the excellent performance in the months prior.

And trillion-dollar financial institution JP Morgan believes the settlement may have ultimately been a good outcome for the industry as a whole.

Nikolaos Panigirtzoglou, analyst at JP Morgan:

We see the prospect of settlement as positive…for crypto investors the prospect of settlement would see the elimination of a potential systemic risk emanating from a hypothetical Binance collapse.

Nikolaos Panigirtzoglou

Essentially, Binance being told to toe the line now – rather than later – may have helped avoid a complete shutdown of the exchange. The ramifications of such a collapse, given the amount of volume and assets Binance holds, would be catastrophic for the industry.

Customers May Leave Binance Amid Crackdown

However, not everyone sees the Binance settlement as being positive for the ecosystem. Head of Private Clients at Swan Bitcoin, Steven Lubka, believes that change is coming – for better or worse.

The DOJ…will bring the firm into compliance if there are things not in line. Binance will likely continue to operate in both the short and long term. However, protocols, compliance procedures and assets may change… I think a material percentage of Binance users liked the platform lax compliance.

Steven Lubka

According to Coinmarketcap, Binance is still by far the biggest exchange in terms of 24h trading volume (registering nearly seven times more than its closest competitor, ByBit). However, how the exchange negotiates the next few weeks and adapts to the changing regulatory environment may play a big part in whether the company can retain its dominance over the crypto market.