At the Top of the Crypto Industry: The Power Vacuum
- Two of the biggest cryptocurrency companies were run by Changpeng Zhao and Sam Bankman-Fried a year ago. While some are battling legal issues, others are competing to steer the industry’s future direction.
Bitcoin is once again trading at a premium. There is a renewed interest in digital currencies from major financial firms.
And enthusiasts for cryptocurrencies are rejoicing at the end of an extended period of low prices and company failures. Nonetheless, the cryptocurrency market is going through a difficult time given the abrupt upsurge in optimism.
When cryptocurrency prices were soaring the last time, Changpeng Zhao and Sam Bankman-Fried, two rival billionaires whose online sparring could move markets, were the most powerful executives in the field. Following their respective falls from power, Mr. Bankman-
Fried, the founder of the cryptocurrency exchange FTX, and Mr. Zhao, the CEO of Binance, the largest cryptocurrency company globally, now face prison sentences.
Last month, a federal jury found Mr. Bankman-Fried guilty of fraud and conspiracy related to the demise of FTX. Three days later, Mr. Zhao pleaded guilty to a money laundering charge and agreed to relinquish control of Binman
With the two men out of the picture, Wall Street executives, government regulators, and a crowded field of cryptocurrency entrepreneurs are fighting for control of the next chapter in the industry.
Their struggle for power may decide whether cryptocurrency thrives in the US, where a crackdown on regulations has made it harder and harder for businesses to operate.
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According to some executives, in order to gain the support of regulators and the general public, the cryptocurrency community needed to rid itself of individuals such as Mr.
Zhao and Mr. Bankman-Fried, who were aggressive entrepreneurs who prioritised growth over compliance. Brian Armstrong, the CEO of Coinbase, an American cryptocurrency exchange, praised Mr Zhao’s guilty plea and called the case a revolution in the sector.
“We now have the chance to begin a new chapter,“ Last month, Mr. Armstrong shared something on social media. “This industry ought to be developed in compliance with American law, right here in the United States.”
However, there are still plenty of businesses in the cryptocurrency space that use dubious business methods and don’t disclose much information about their experimental goods.
American University financial regulation expert Hilary Allen stated, “There is no intrinsic value to any of this.” “The only way to create demand is to have more money floating around and more people willing to buy into it.” There have always been notable leaders in the cryptocurrency space.
Under the pseudonym Satoshi Nakamoto, whose enigmatic identity became its own brand, the concept behind Bitcoin, the first and most valuable digital currency, was first outlined.
New power and influence centres arose as the crypto world grew. In 2017, Mr. Zhao established Binance, which has since grown to become the biggest global marketplace for the purchase and sale of experimental coins.
Mr. Zhao became a Twitter celebrity due to the magnitude and reach of the exchange.
Known as X, he amassed more than eight million followers on social media by discounting government lawsuits and accusations of unlawful activity as false propaganda from opponents of cryptocurrency. Mr. Bankman-Fried was Mr. Zhao’s main opponent. He cultivated a persona as the mature, responsible person who would assist the nascent industry in interacting with regulators by appearing on billboards and magazine covers. Both Mr. Zhao and Mr. Bankman-Fried ultimately lost favour. When Mr. Bankman-Fried is sentenced in March, he could spend decades behind bars. Prosectors anticipate requesting a sentence of approximately eighteen months, so Mr. Zhao will probably get a lighter one.
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Jeremy Allaire, the CEO of the cryptocurrency startup Circle, stated, “It’s a really good thing that those characters aren’t in the plot anymore.”
“This is my main focus, and it has been my main focus: How can we make this useful for the world?” The leading advocates in the industry are already being replaced by a new generation of executives.
Paolo Ardoino, a vocal supporter of cryptocurrencies with a sizable online fan base, recently assumed leadership of Tether, the organisation in charge of managing one of the most well-known virtual currencies.
Richard Teng, a prominent executive at the exchange who had been trained to take over Mr. Zhao’s responsibilities, succeeded him at Binance. In theory, Mr. Teng is the antithesis of Mr. Zhao.
\The founder of Binance had a negative attitude towards regulators, but Mr. Teng is a seasoned employee of Singapore’s central bank, the Monetary Authority of Singapore. The future of Binance is unclear.
The company agreed to pay a $4.5 billion fine to multiple government agencies and have a U.S. monitor integrated into the company for the next three years as part of a settlement last month.
“I think it’s a real ‘wait and see,'” Mr. Allaire stated. “I don’t believe anyone is fully aware of the meaning of that monitorship.”
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