The colorful and controversial former head of the global cryptocurrency exchange Binance, Changpeng Zhao, has now officially resigned as head of the firm's stateside arm, Binance.US.

Mr. Zhao has been in the regulators’ crosshairs for years, with both the Department of Justice and the Securities Exchange Commission (SEC) pursuing him for securities law violations and money laundering.

His departure from the top position at Binance comes just one week after he entered a guilty plea in a Seattle, Washington, federal court to money-laundering charges brought by the Justice Department. The fallen mogul will have to pay a $4.3 billion fine, but thanks to a plea arrangement, Mr. Zhao is expected to spend perhaps a year and a half in jail rather than the decade or more than he could otherwise face.

Yesterday, a federal judge ruled that Mr. Zhao cannot leave the country at least until the federal court in Seattle comes to a decision on whether he should be able to travel to one of the nations where he holds citizenship (Canada and the United Arab Emirates) prior to his February sentencing.

The fall of 2023 has seen a wave of crackdowns against crypto exchanges and the people who run them, notably including the Nov. 2 guilty verdict in the criminal trial of FTX founder Sam Bankman-Fried that a jury took just four hours to reach. On Nov. 20, the SEC announced charges against San Francisco-based crypto exchange Kraken for allegedly operating as an unlicensed exchange, broker-dealer, and clearing agency.

With Binance’s longstanding rival, FTX, struggling under new CEO John Ray III to extricate itself from more than $8 billion in debt to large and small creditors around the world, the dethronement of Mr. Zhao may represent, for regulators, one of the final nails in the coffin of the crypto industry they continue to view as a haven for fraud and money laundering. Moreover, the government may feel it has at least partly compensated for the humiliating failure it met with in its unsuccessful lawsuit against Ripple for the sale of digital token XRP on a public exchange.

Binance’s rise and fall is of a piece with the cyclical nature of other crypto exchanges’ fortunes. They and their founders have risen to the heights of fame and popularity and amassed great wealth—Sam Bankman-Fried at one point was worth more than $15 billion—and then come crashing down amid fear, uncertainty, and doubt, public backlash, and ruinous legal action, not just in one jurisdiction but also globally.

The very decentralized nature that places such exchanges less directly under the oversight of a single government or regulator also helps reputational and legal trouble pursue them across borders. The fate of Binance and Mr. Zhao is a case in point.

Global Woes

Just weeks after a U.S. federal court hit Mr. Zhao with a summons in June 2023, trouble developed for exchange and its operations in Germany. BaFin, the German financial regulator, had well-founded reservations about granting Binance’s request for a license to operate there, leading Binance to withdraw its request.

Binance’s efforts to obtain a license in Austria met with the same fate. In June 2023, the exchange decided that things were not working out as hoped in Cyprus and applied for the deregistration of its operations there.

And the failure to win a virtual asset service provider in Holland led to a similarly abrupt pullout of all services from that country as of July 17, 2023.

In the absence of a license, the exchange could not legally advertise its services. Lest anyone accuse BaFin of singling out Binance, the regulator has also gone after such fintech and crypto enterprises as Crypto.com and Cakedefi.

Under its president Mark Branson, the regulator has taken a hard line against decentralized finance and the crypto market in general. Mr. Branson seems to want to earn comparisons to SEC Chair Gary Gensler, who has publicly rebuked crypto exchanges and whose agency recently promoted an equally vocal crypto critic, Stephanie Allen, who used to work with Mr. Gensler at the Commodity Futures Exchange Commission.

But BaFin’s stance was clear: Binance is bad news and should not be allowed to operate in any jurisdiction that rightly wants to avert the flourishing of dark pools of digital money that might go toward financing terrorism, hacking, the global drug trade, human trafficking, and other ills.

U.S. regulators are still smarting from their defeat in the Ripple litigation, and the current SEC chair has painted crypto as “a field rife with fraud, rife with hucksters.”

In the fast-paced, perpetually troubled world of cryptocurrency, what will be the next domino to fall?

The Epoch Times has reached out to Binance for comment.