THEY WERE ALWAYS GOING TO GO AFTER BINANCE

With news that the U.S. Commodities and Futures Trading Commission (CFTC) is launching a case against Binance, the global crypto community seems split between panic and denial. But, in my mind at least, it was always a given that such action would come - whether from the CFTC, SEC, DOJ, IRS, or a combination of agencies. 

I don’t say the action was a given because Binance, and its executives like CEO Changpeng Zhao (aka ‘CZ’), were necessarily breaking any laws, but rather because of the existential threat Binance represents to the traditional financial system coupled with its unorthodox structure. 

Although Binance long ago separated its US and non-US operations and has invested heavily in compliance, the fact remains that all easily accessible mainstream crypto on and off ramps are seen as a threat by US authorities. This has been continually demonstrated over the past few years, from the SEC’s crusade against Ripple and Coinbase, the murky goings-on surrounding FTX’s demise, and the controlled demolition of crypto-friendly banks like Silvergate and Silicon Valley Bank. 

Why would anyone think Binance could stay out of the crosshairs?

When you also consider that Binance has long been associated with an ‘unconventional’ business structure - notoriously avoiding having a physical global headquarters - it becomes even more surprising that CZ and co. have survived this long. As anyone who tries to do anything in business in today’s KYC/AML/ATF climate knows only too well, every substantial financial move has to be cross-checked, substantiated, and tied to physical, verified addresses. 

Considering the incredibly interconnected world we live in (and the sweeping, often tenuous, jurisdiction claimed by US authorities), it also seems inevitable that an operation the size of Binance would find it impossible to avoid some US exposure. And, let's not forget, some of the jurisdictions Binance has been associated with, like Malta, Seychelles, and the Cayman Islands, are like red rags to a bull as far as US authorities are concerned.

Of course, as reported last month in The Wall Street Journal, Binance has been going to great lengths to try and pacify US authorities, and fully well expected to have to cough up a big settlement. But, let’s be honest, considering the rapid growth of crypto and such an unclear regulatory landscape, this is now par for the course stateside.  However, I suspect they will make any settlement so unpalatable to CZ that the case will indeed end up going to trial. And, considering the hostility of mainstream media to crypto in the US, the lack of knowledge among most of the general population, and the opaque offshore nature of Binance itself, I don’t think a jury is likely to be sympathetic. 

In a nutshell, I think the ‘powers that be’ have been saving the biggest crypto exchange for last - but they always intended to try and destroy it. The coming battle will be dramatic and may well decide the fate of centralized cryptocurrency exchanges.