Changpeng “CZ” Zhao has become the latest in a long line of crypto founders facing potentially significant legal consequences.
The founder of Binance Holdings Ltd., the world’s largest crypto exchange, resigned from his post as CEO as part of a settlement agreement with US prosecutors that includes the possibility of jail time. That makes him the newest member of a club that includes Sam Bankman-Fried of FTX, Alex Mashinsky of Celsius, and Do Kwon of Terraform Labs.
Zhao, who founded Binance in 2017, developed a reputation for being a canny operator, a fierce competitor, and someone prone to saying things like “I don’t really care much about money” while amassing a fortune measured in the billions.
Read more: Changpeng Zhao, Brawling Titan of Binance, Meets a Sudden Defeat
Zhao’s resignation and his near-simultaneous replacement by Richard Teng, who built his reputation not in crypto but at Singapore’s central bank, is emblematic of the kind of shift in approach being pushed by regulators around the world.
The landscape for digital assets appears to be shifting away from the “wild west” of crypto populated by risk-loving cowboys who seek forgiveness instead of permission, who publicly spar with the liquidators attempting to recover assets for their creditors, or who use stolen billions to lobby for policy changes.
The swelling ranks of crypto founders facing civil and criminal penalties around the world suggest governments are increasingly empowered to clamp down on bad behavior by digital-asset influencers.
The Ineffective Altruist, Sam Bankman-Fried
Sam Bankman-Fried, the disgraced founder of now bankrupt crypto firms FTX and Alameda Research known widely as SBF, was found guilty of seven counts of fraud and conspiracy and is facing decades in prison.
Bankman-Fried directed the transfer of FTX customer money into Alameda Research, an affiliated hedge fund, for risky investments, political donations and expensive real estate before both companies collapsed into bankruptcy last year.
Read: FTX’s Crypto Kids Came Dangerously Close to Upending Futures
The King of the LUNAtics, Do Kwon
Before Terraform Labs co-founder Do Kwon was accused by US prosecutors of orchestrating a years-long fraud that wiped out at least $40 billion in market value, he had carved out a particularly irascible niche in the digital asset industry.
The collapse of his algorithmic stablecoin project TerraUSD and its related token Luna acted as a major trigger for crypto winter that started in 2022.
Kwon was jailed in Montenegro on allegations of attempting to travel with a forged passport, and had been considered a fugitive from fraud charges in his native South Korea. Kwon has denied wrongdoing.
The Master Marketer, Alex Mashinsky
Alex Mashinsky, the former chief executive of cryptocurrency lender Celsius Network, was arrested in New York in July on charges of committing wire fraud and other crimes. Mashinsky is accused of waging a multi-year scheme to mislead customers before the company he founded file for bankruptcy with more than $1 billion in debts.
Prosecutors also accused him of pumping up the price of his firm’s native crypto token, CEL. He has pleaded not guilty to the charges and is currently out on bail. His trial has been set for September 2024.
The Friends Since High School, Su Zhu and Kyle Davies
The founders of Three Arrows Capital bankrupted their hedge fund with leveraged bets that went south, and took a large chunk of the crypto market down with them. Liquidators are seeking to recover $1.3 billion dollars from the pair, who listed themselves among the creditors to their collapsed fund.
Su Zhu was detained in Singapore while trying to leave the country in September. The precise whereabouts of Kyle Davies, who is subject to a similar order following months of sparring with the liquidators, are unknown.
