Binance’s CZ ‘banned for life’ from operating the exchange

• Binance’s CZ is reportedly “banned for life” from operating the exchange. 
• However, policy watchers are divided on whether he can return as CEO. 

Changpeng Zhao aka CZ, the former Binance [BNB] exchange CEO, could have a limited influence on exchange operations after his jail sentence. CZ’s sentence will end on the 29th of September.

However, the extent of his influence on the exchange could be limited to his capacity as the majority shareholder only.   

According to current CEO Richard Teng, CZ has reportedly been “banned for life” from operating the exchange as part of its U.S. plea deal.

In late 2023, as part of CZ’s plea deal with the US government, Binance was fined $4 billion. The agreement also barred him from acting as CEO for three years and sentenced him to four months in jail.

This followed charges leveled against Binance for violating the US Bank Secrecy Act. 

CZ’s lifetime ban

Given the plea deal’s 3-year ban, the reported “lifetime ban” surprised the community. However, Richard Teng confirmed noted that CZ could still exercise his right as the largest shareholder. 

“As a shareholder, he will be looking at the performance of the company, and if things are not up to what he expects, as an investor, it’s always his right to replace, nominate a new board of directors, or a new CEO … shareholders can also always table a resolution.”

Although being the largest shareholder gives CZ immense powers to exert some influence on the exchange, as Teng stated, U.S. regulators will scrutinize his moves. 

The U.S. will monitor the exchange for three to five years as part of the plea deal to gauge the firm’s checks and balances.

Reportedly, CZ’s role as the largest shareholder could be monitored, according to Yesha Yadav, a law professor at Vanderbilt University. She said, 

“The monitor is going to have a big impact in that sense to act 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 wasn’t a “requirement” and suggested that it didn’t ban CZ from returning as a CEO. 

“The bottom line is that a provision could indeed be written that would bar Binance from bringing him back, and that would allow the government to claim breach if the firm did so. That provision does not appear in the agreement.”

That said, during his handover statement to the current CEO, CZ

“As a shareholder and former CEO with historical knowledge of our company, I will remain available to the team to consult as needed, consistent with the framework set out in our U.S. agency resolutions.” 

It remains to be seen how his role will be dictated on the exchange after his jail term. In the meantime, BNB was barely holding above $500 amid a broader market sell-off.