Journalist
Posted:
- Binance’s CZ has reportedly been “banned for life” from operating the exchange.
- However, policy observers are divided on whether he can return as CEO.
Changpeng Zhao aka CZ, formerly Binance [BNB] CEO of the exchangecould have limited influence on exchange transactions after his prison sentence. CZ’s sentence expires on September 29.
However, the extent of his influence on the stock market could be limited to his capacity as sole majority shareholder.
According to current CEO Richard Teng, CZ has done just that reportedly has been “barred for life” from operating the exchange as part of the US plea deal.
End of 2023, as part of CZ’s plea deal Together with the US government, Binance was fined $4 billion. The agreement also banned him from acting as CEO for three years and sentenced him to four months in prison.
This followed charges against Binance for violating the US Bank Secrecy Act.
CZ’s life ban
Given the three-year ban on the plea deal, the reported “lifetime ban” took the community by surprise. However, Richard Teng confirmed that CZ could still exercise its right as the largest shareholder.
“As a shareholder he will look at the performance of the company, and if things do not meet expectations, as an investor he always has the right to replace, nominate a new board of directors, or a new CEO… shareholders can always submit a decision.”
Although CZ, as the largest shareholder, has enormous powers to exert some influence on the stock market, as Teng stated, US regulators will be closely watching its moves.
The US will monitor the stock market for three to five years as part of the plea deal to gauge the company’s checks and balances.
CZ’s role as the largest shareholder could reportedly be under scrutiny, according to Yesha Yadav, a law professor at Vanderbilt University. She said:
“In this sense, the monitor will have a major impact by acting as a check and balance to support the board and will have discretion when it comes to CZ’s role as a very important shareholder.”
However, a former federal prosecutor, Daniel Richmann, noted that the ban was not a “requirement” and suggested that it did not prevent CZ from returning as CEO.
“The bottom line is that a provision could indeed be written that would prevent Binance from bringing it back, and would allow the government to claim infringement if the company were to do so. This provision does not appear in the agreement.”
That said, during his handover statement to the current CEO, CZ said he would be available to be consulted by the team within the scope of US agency resolutions.
“As a shareholder and former CEO with historical knowledge of our business, I will remain available to the team for consultation as needed, in accordance with the framework set out in our US agency resolutions.”
It remains to be seen how his role will be dictated on the exchange after his prison sentence. Meanwhile, BNB barely held above $500 amid a broader market sell-off.