JPMorgan Says Binance’s Record $4.3B Settlement Removes ‘Systemic Risk,’ Calls It ‘Positive’

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Trent Alan

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Trent Alan

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Trent has a background and education in journalism and communications, with two decades of experience editing and writing on a diverse array of topics. In recent years, however, he has shifted his...

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November 22, 2023 15:37 EST

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Crypto exchange Binance’s $4.3 billion settlement with U.S. authorities marks a positive development for the company and the broader cryptocurrency sector, according to analysts at JPMorgan Chase & Co.

Settlement to Remove Regulatory Uncertainty

In a note to clients, JPMorgan said the settlement removes uncertainty surrounding Binance’s operations and should allow its trading and BNB Smart Chain businesses to benefit going forward.

“We see the prospect of settlement as positive as uncertainty around Binance itself would subside and its trading and BNB Smart Chain business would benefit,” the analysts wrote. “For crypto investors the prospect of settlement would see the elimination of a potential systemic risk emanating from a hypothetical Binance collapse.”

The settlement ends a long-running investigation into Binance over allegations of money laundering and sanctions violations. As part of the deal announced Tuesday, Binance agreed to pay $4.3 billion, one of the largest fines in U.S. corporate history.

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 🔶 BNB (@cz_binance) November 21, 2023

Binance’s co-founder and CEO Changpeng “CZ” Zhao also agreed to pay a personal fine of $50 million. He stepped down as CEO but said in an internal memo that Binance “will be fine” despite the changes.

Richard Teng has taken over as Binance’s new CEO. He said his priorities include providing assurance to users that they can remain confident in the company’s financial strength and security.

JPMorgan Foresees Binance Rebound After Record Penalties

JPMorgan analysts said with the settlement, Binance can now focus on growing its business and will likely emerge even stronger once the transition period ends. They called the outcome “positive” despite the record penalties.

The settlement news triggered over $1 billion in outflows from Binance in the past day, according to data from DefiLlama. Rival exchanges saw an influx of funds during the same period.

Binance’s native BNB token also fell more than 10% amid the selloff, dropping below $226.

While costly, analysts say the settlement will allow Binance to move past the long-running investigation and seek to rebuild trust with users and regulators globally. The company called it an “important step” in laying the foundation for its next 50 years.