The Downfall of Crypto Kings: Binance's CZ and Terraform's Do Kwon

Binance founder Changpeng Zhao, or “CZ,” was sentenced earlier this year to four months in prison for allowing rampant money laundering on the world's largest cryptocurrency exchange. Crypto company Terraform Labs' co-founder Do Kwon was once a king of the crypto world, but now he is awaiting extradition to the U.S. or South Korea

Binance founder Changpeng Zhao, also known as “CZ,” was sentenced earlier this year to four months in prison for allowing rampant money laundering on the world’s largest cryptocurrency exchange.

Binance and then-CEO Zhao pleaded guilty in November 2023 to money laundering charges for allowing customers in other countries to transact in violation of US sanctions. The company agreed to pay a fine of $4.3 billion as part of the settlement, while Zhao agreed to pay a fine of $50 million and step down from his position.

Richard Teng, Binance’s regional director markets head and a former Abu Dhabi regulator, has since taken over as CEO. He is making some major changes in the firm, such as searching for a headquarters location, which counters Binance’s one-time stance that a decentralized firm does not need an office. The crypto exchange might be signaling to authorities that it is rebuilding itself after Zhao’s departure.

Do Kwon

Crypto company Terraform Labs’ co-founder Do Kwon was once a king of the crypto world, but now he is awaiting extradition to the U.S. or South Korea, where he could face charges.

Terraform Labs collapsed in 2022, which had a significant impact on the cryptocurrency world. Terraform’s stablecoin, TerraUSD (UST), was tied to the cryptocurrency Terra (LUNA), which means $1 UST was always worth $1 USD of Luna. However, in May 2022, the value of LUNA plummeted from over $120 per coin to nearly zero, resulting in a loss of over $50 billion in UST/LUNA market capitalization and triggering a crash that wiped $400 billion in value from the wider crypto market.

The SEC filed a case against Terraform and Kwon regarding the deceptive promotion and sale of crypto tokens, particularly the algorithmic stablecoin TerraUSD (UST).

Earlier this year, Kwon was arrested in March 2023 for forging travel documents while attempting to leave the southern European country Montenegro. He agreed to pay $4.47 billion to settle a civil lawsuit filed by the U.S. Securities and Exchange Commission.