Binance's USD 4.3 Billion Fine: A Challenge to Financial Status Quo?

By: Eva Baxter

Global cryptocurrency exchange Binance was recently fined one of the largest corporate penalties in history, according to former BitMEX CEO Arthur Hayes. Binance and its founder, Changpeng 'CZ' Zhao admitted to violating US laws pertaining to money laundering and terror financing. Hayes highlighted that Binance's rise, outside of traditional financial and political controls, led to enforcement actions against the exchange.

The growth of Binance reflects its growing influence globally. Hayes identified Binance's role in enabling people to own intermediaries and cryptocurrency assets without traditional players. He attributed this to centralized exchanges using state tools to challenge the institutions that run the global financial and political system. Interestingly, Binance's fine paints a stark contrast with high-profile mainstream banking scandals and the 2008 global financial crisis, where banking and financial institutions escaped major accountability.

Hayes argues that Chinese state-owned enterprises, manufacturers, and investors are likely to begin investing capital offshore owing to unattractive local returns. Given the recent approval of licensed cryptocurrency exchanges in Hong Kong and China's past as a significant Bitcoin mining nation, there's speculation that Chinese investors might favor Bitcoin. This notion is further backed by Hayes' argument that China may increase the availability and affordability of Chinese yuan-based credit, resulting in a surge in the prices of all fixed supply assets, including Bitcoin, in dollar terms. However, these predictions remain speculative and should be taken with a grain of caution.