- Binance CEO Richard Teng has confirmed that former CEO, Changpeng Zhao, is banned from managing or operating the company
- However, Zhao retains influence as Binance’s largest shareholder, with the ability to impact board decisions and corporate direction
- Zhao is set to complete his four-month prison sentence later this month
Former Binance CEO Changpeng Zhao is banned from operating the cryptocurrency exchange, his successor has confirmed. In an interview with Axios, Richard Teng confirmed that the co-founder, currently serving a four-month jail sentence for contravening financial regulations with regard to Binance’s operations, will never have a controlling position again, although he does still wield influence as the company’s largest shareholder. This confirmation follows Binance’s plea deal with the US Department of Justice (DoJ), which previously left room for interpretation of Zhao’s involvement.
Zhao’s Continuing Influence
Zhao was sentenced to four months in a US prison after arranging a plea deal with federal prosecutors over both personal and company failures with regard to money laundering rules. The sentencing left it a little ambiguous as to what Zhao was allowed to do upon his release, but Teng confirmed in his interview that the co-founder is not allowed back at the helm.
Despite the lifetime ban, however, Zhao will continue to influence Binance’s strategic direction; as the company’s largest shareholder, he retains the ability to nominate new board members or even replace the CEO if he sees fit. “As a shareholder, he will be looking at the performance of the company,” Teng said, adding, “It’s always his right to replace, nominate a new board of directors, or a new CEO.”
Zhao, who was once Binance’s sole board member, now sees his influence balanced by a seven-member board established after the plea deal. However, the ambiguity surrounding what exactly constitutes “managing or operating” has raised questions, such as whether Zhao can serve in a consulting role or guide Binance’s leadership from the sidelines. These are among the concerns that legal experts and regulators will continue to monitor in the coming years.
Monitors to Oversee Zhao’s Involvement
To ensure compliance with the terms of the plea deal, two external monitors have been appointed to oversee Binance’s operations. Vanderbilt law professor Yesha Yadav noted the importance of this oversight to Axios, suggesting that the monitors will act as a check on Zhao’s shareholder powers.
“The monitor is going to have a big impact… to act as a check and balance to support the board,” she said, hinting at the challenges ahead for both Zhao and Binance.
Legal Gray Areas
The language of the DOJ’s agreement leaves some uncertainty around Zhao’s long-term future with Binance. While the company has made a clear public statement that he is barred from future management roles, legal experts like Columbia Law School’s Daniel Richman argue that the agreement does not entirely preclude Zhao from returning as CEO.
Richman told Axios, “The agreement doesn’t shut the door entirely on his return, making it harder for the DOJ to pursue if he does.” Still, Binance insists that Zhao is prohibited from future involvement in managing the company.
For his part, Zhao seems ready to move on from his role at Binance, stating he has no plans to return to a leadership position. Instead, he plans to focus on investments in blockchain, artificial intelligence, and biotechnology.
“That life no longer exists for me,” Zhao wrote in an April letter to the court. Yet, with his significant shareholder influence, Zhao’s role in Binance’s future remains an open question as the company navigates its new chapter under intense scrutiny from US regulators.
