jakiro
Source: Plain Language Blockchain
Not long ago, former Binance CEO Zhao Changpeng was released from prison from the United States and returned to Dubai to appear in industry events, which broke the outside world’s speculation that he would be “pled” by the United States for a long time.Recently, Zhao Changpeng was also listed on the Hurun Rich List as the founder of the world’s largest crypto trading platform. While people are impressed that he will also be “in trouble” as a rich man, he looks back at the founding of many leading crypto companies in the history of crypto development.People and executives have been arrested and imprisoned, and some even listed the long list of “Correspondent Entrepreneurship Risk List”Some people can’t help but ask: Why is the “risk of imprisonment” of the cryptocurrency giants high?
Encryption tycoons who walk the tightrope
Since the birth of Bitcoin, the crypto industry has been around for more than ten years. During this period, entrepreneurs have been imprisoned, including some popular “big guys”.
In the cryptocurrency industry venture risk list, there are the famous “Mentougou Incident” in the future. In 2014, Mt.Gox, the world’s largest Bitcoin trading platform, was hacked and lost hundreds of thousands of Bitcoins. Former Mentougou CEO Fapang (Mark)Karpeles) was sentenced for “suspected to tamper with financial records” (some people questioned his custody of his own theft, but no relevant evidence was found, and theft incident also became a unsolved case).
Former Mentougou CEO Mark Karpeles
Recently, in addition to Zhao Changpeng, Luna founder Do kwon, founder of FTX founder SBF, etc. One is the crime of “security fraud” and the other is the crime of “financial fraud”.25 years in prison and a $11 billion fine.
Arrested Luna founder Do kwon
In contrast, Zhao Changpeng was imprisoned for four months, which was a minor one. His crime was “failed to implement an effective anti-money laundering program, which violated the US Bank Secrecy Act.” To be precise, it was the company he managed (Binance).) Failed to implement anti-money laundering obligations and did not cooperate with the US sanctions policy.Although Binance is not a bank, it is helpless to have this matter regardless of whether it is wronged or not.
It is said that crypto entrepreneurship is risky, but I didn’t expect it to be so big. It is not an exaggeration to say that the entrepreneurship of bigwigs in the circle is like a “strengthwire”.
Five reasons why the “risk of prison” of big men in the circle are high. The last point is the key
The crimes of the prides in prison are varied. Before these people were imprisoned, they were all “proud sons of heaven” who had learned a lot. If they were to say that they were just “deficient in legal awareness”, the reason for this would definitely not be tenable.By comparing and analyzing the jail-related incidents of these big shots, it is actually not difficult to find some commonalities and the underlying logic behind them.Finally, we concluded that there are at least five reasons why the “risk” of big men in the circle are high:
1) Can’t stand temptation, radical greed
Generally speaking, many leading platforms and projects in the crypto industry often have to host tens of billions of dollars in assets for users.In an era where liquidity is money every day, even if you do nothing, you can earn a lot of profits in vain.But many people can’t resist the temptation in the end. Driven by human nature, they adopt radical strategies and embezzle users’ assets and invest in high-risk markets. The holes are getting bigger and bigger, and eventually burst.
2) Innovation and violation are only separated by a wall
Many times, innovation means breaking existing rules. Encryption projects were once an innovation in decentralized Internet finance. At this time, the old regulatory measures were definitely not up to date and inadequate, and the regulations did not clearly stipulate. In most cases,It is necessary to rely on innovative enterprises to consciously regulate their behavior, but often it will evolve into“P2P Finance”That’s a difficult situation.
Although some countries and regions have strong inclusiveness for financial innovations such as encryption, some activities are ultimately a major challenge to the existing system. In many cases, there is no explicit regulation on what can be done, what can’t be done, and where the red line is.All these make it a wall between innovation and violation of the law, and it is also a helpless thing for all entrepreneurs.
3) The original sin of “encryption”
To this day, even though crypto assets represented by Bitcoin have long entered the mainstream vision of the public.But there are still quite a few people who think this is a “dark” industry because it can be used for many illegal purposes and facilitate crime.In addition, the various wealth gains from many early crypto asset holders have led to the “uneven distribution of wealth” in the eyes of some people, and hatred is full.
Due to cognitive differences, people who do not recognize or accept view the crypto industry with tinted glasses. These people are widely present in the judicial team. In this way, when the original sin of “encryption” is displayed one by one by one, they will continue to continueInvest in various legal challenges to crypto entrepreneurs and related projects.
Of course, with the mainstreaming of crypto assets, more and more people have put down their prejudice after further understanding it, but they cannot expect to get a reversal overnight, which takes time.
4) Global compliance costs are high and difficult
Take crypto trading platforms as an example. Since crypto platforms are usually aimed at global users, global crypto asset financial activities, like other traditional financial institutions, need to comply with different laws and regulations, and some countries have long-arm jurisdiction policies.And we have to face the difficulties created by regulators wearing “tinted glasses” in some areas.
Traditional multinational financial institutions take Paypal as an example. Each time they deploy related business in a country, they have to apply for various licenses locally, face different regulatory policies, and deal with regulators in different regions.If a certain link is not done properly, you may face local fines of hundreds of millions of yuan, and the manpower and material resources invested here are difficult to measure.
As early as 2022, Zhao Changpeng said on social media that Binance has spent more than $1 billion on global compliance. Obviously, this number is constantly increasing, plus dozens of times during the communication and reconciliation process with US regulators this year.The fine of 100 million is indeed an astronomical figure in general.
5) The competition for the “international voice” of the crypto market
Since El Salvador announced “All in” Bitcoin, we already know that national players have begun to enter the field.Crypto assets such as Bitcoin not only represent innovation in financial payments, but also represent the future technology of the next generation of interconnected technologies such as Web3.In terms of the right to speak in innovative technology, even if you understand that there are certain risks, most countries are unwilling to lag behind.
Take the previous case, the United States’ handling of FTX and the punishment it imposed on Binance eventually put their founders in jail, and FTX disappeared in this track, while Binance paid billions for it.US dollars come to reach a settlement with regulatory authorities.At the same time, the mediation plan also requires that the U.S. Treasury Department will retain access to Binance accounts and systems for five years.
The purpose of various regulatory authorities in the United States is not only to maintain the stability of the financial market, but also to crack down on top trading platforms, requiring these platforms to abide by the long-arm jurisdiction of the United States and the rules of the game designated by the United States, which also plays a role in encrypting theA demonstration role of the industry.There are now signs that some countries use blockchain and crypto assets to conduct international trade to bypass the hegemony of the US dollar.For the United States, crypto assets such as Bitcoin are still a “sword”. If this sword cannot be destroyed, it can only be controlled in one’s own hands in some way, or guide them for their own use, so that they canBe the biggest beneficiary yourself.
In the United States, platforms such as Binance that have extremely high voice in the crypto asset market, processing and in-depth monitoring and operation, the Bitcoin spot ETF that has been indecisive for many years was suddenly approved, and the Ethereum spot ETF was also approved. The relevant United StatesOnly then did capital “reassuredly” pour into the crypto market from these security paths, and since then, the United States has acquired a certain degree of “pricing power” while integrating the crypto market into its control.
Trump, who just won the 47th president of the United States, mentioned in his speech at the Bitcoin Conference that Bitcoin is not just a technological miracle, as you know, it is also a miracle of cooperation and human achievements.The reason he came to the Bitcoin community to give a speech is because he adheres to the principle of “America First”. His vision is to let the United States dominate the future. He hopes that the United States will become a trend-leading country. He wants to ensure that the United States becomes the crypto capital and the world on the earth.on the Bitcoin superpower.
summary
For centralized platforms and project teams, supervision is never avoidable, and countries and regions that balance supervision with innovation in place will become the biggest beneficiaries of this technology and innovation.With the recent US election settled, crypto-friendly President Trump is about to take office, and it will soon bring a more friendly regulatory environment. I believe that crypto entrepreneurs, including those of Zhao Changpeng and other cryptocurrency giants, will be in the future.Our “hungry hearts” are finally about to let go, and in the future, we will “safe” promote the accelerated implementation of encryption and Web3 application innovation.
