Key highlights:Changpeng “CZ” Zhao, the founder and CEO who led Binance's rise to the top, was forced to resign as part of a $4 billion settlement with US regulators. They accused Binance of lax oversight that enabled illegal activity on the platform. With the face of Binance out of the picture, traders withdrew funds, and liquidity dropped sharply in the markets. If new leadership can steer Binance to safety and the exchange keeps things running smoothly, believers argue it could bounce back stronger than ever.
The cryptocurrency world was shaken last week with news that Changpeng Zhao (CZ), founder and CEO of leading exchange Binance, would be stepping down from his role and pleading guilty to criminal charges in the US. With CZ at the helm for over 5 years of unprecedented growth, many are wondering what impact his departure may have on Binance Coin (BNB) and the company's flagship cryptocurrency.
CZ pleads guilty as Binance agrees to $4 billion settlement
In a closely coordinated effort between US regulators, CZ appeared in a Seattle court to formally admit Binance had failed to implement proper anti-money laundering controls and compliance measures. As part of a broad settlement, Binance agreed to pay more than $4 billion in fines while CZ himself was ordered to pay a $50 million criminal fine.
Prosecutors alleged Binance had become the "largest cryptocurrency exchange in the world in part because of the crimes it committed." The platform was accused of enabling all manner of illicit activity, from child pornography to terrorist financing, due to lax oversight. CZ's resignation was a condition of the deal, designed to ensure new leadership at Binance focused on cleaning up its act.
Image source: Kaiko Research, X @riyad_carey
Trading on Binance becomes "challenging" as liquidity drops 25%
In the immediate aftermath, around $1 billion was reportedly withdrawn from Binance as traders digested the news. Perhaps more worryingly, order book liquidity (the depth of buy/sell orders) fell by 25% across major cryptocurrencies, according to analytics from Kaiko.
Large traders now faced increased "slippage" or risks of market moves between placing an order and execution. As one analyst humorously quipped on Twitter, "The markets reacted about as calmly as a kid being told to clean their room." With crypto often following the movements of whales, reduced liquidity raises concerns.
BNB price prediction: A bumpy road ahead for Binance Coin?
So what does this mean for the future price of BNB, which reached an all-time high of $690 in May 2021? Looking at our BNB price prediction, the 1-year forecast sees BNB reaching $977 by this time next year. But that estimate was made prior to CZ's resignation and Binance's penalty, so the reality may differ.
CoinCodex analysts note that BNB, like most cryptocurrencies, typically follows the Bitcoin halving cycle with highs 2 years after each event. The next halving is estimated for 2024, which could see BNB hit $1362. But major shakeups like legal issues often derail such predictions. With a new CEO at the helm, it remains to be seen if Binance can successfully transition without disruption to users and markets.
For conservative investors, it's wise to proceed cautiously with BNB until the dust settles. However, adventurous traders may view current depressed prices as a buying opportunity if they're bullish on Binance's long-term prospects. With CZ now shifting focus to more passive investing, according to his Twitter, a new chapter begins for both the company and BNB coin in a period of transition and regulation across the crypto sphere.
Today, I stepped down as CEO of Binance. Admittedly, it was not easy to let go emotionally. But I know it is the right thing to do. I made mistakes, and I must take responsibility. This is best for our community, for Binance, and for myself. Binance is no longer a baby. It is…— CZ ? Binance (@cz_binance) November 21, 2023
How the story continues to unfold will shape the price path of BNB over the coming year. For now, it seems the road could be bumpy as Binance navigates life after its celebrity CEO. But if they can prove compliance and maintain service quality, the biggest crypto exchange may emerge from this challenge as strong as ever.