Binance, CZ paid for defying financial, political status quo — Arthur Hayes
The explosive growth and success of Binance outside of the control of the traditional financial and political establishment led to heavy-handed enforcement actions against the exchange, according to former BitMEX CEO Arthur Hayes.
Hayes delved into the recent $4.3 billion settlement paid out by Binance in a lengthy Substack post. This comes after the exchange and its founder, Changpeng “CZ” Zhao, admitted violating United States laws around money laundering and terror financing.
As Hayes highlights, CZ’s global exchange became the largest by trading volume in the six years since its inception in 2017. The former BitMEX CEO points out that Binance would also be rated in the top 10 traditional exchanges by average daily volume, which indicates its growing global influence.
“The problem for the financial and political establishment was that the intermediaries facilitating flows into and out of the industrial revolution named blockchain were not run by members of their class,” Hayes opined.
The former BitMEX CEO, who himself fell foul of violating U.S. Bank Secrecy Act regulations after the exchange failed to implement adequate Know Your Customer procedures, highlighted Binance’s role in allowing everyday people to own intermediaries and cryptocurrency assets without needing traditional players.
Hayes added that from a fundamental standpoint, centralized exchanges use tools of the state, such as the company and legal structures, to “disintermediate the very institutions that were supposed to run the global financial and political system.”
Hayes then refers to several high-profile mainstream banking scandals, as well as the 2008 global financial crisis and subsequent recession, which was directly attributed to the collapse of the
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