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Right around this time last year, Binance’s CEO Changpeng Zhao was labeled the inadvertent whistleblower for the FTX disaster.

CZ has denied any malicious intent, and on the surface, it’s just a “business as usual” style post to inform Binance’s customers that the exchange had decided to liquidate their FTT token.

But as we all know now, that update was the first Jenga block in the collapse of the FTX tower.

Now, after an investigation and a lawsuit from the DOJ, it appears that Binance will have to pay the piper.

But will CZ be crypto’s next SBF? Or is this just going to be a regulatory slap on the wrist?

Espresso Shots

☕️ SEC Sues Kraken, Again

The SEC has filed a lawsuit against Kraken, alleging that the exchange commingled customer funds while asking as an unregistered broker.

"Similarly, Kraken has held at times more than $5 billion worth of its customers' cash, and it also commingles some of its customers' cash with some of its own," the lawsuit reads. "In fact, Kraken has at times paid operational expenses directly from bank accounts that hold customer cash."

Earlier this year, Kraken was forced to pay $33 million to settle charges regarding its staking-as-a-service offerings.

Though it feels like this may be an effort by regulators to distract their families by announcing some “really big enforcement actions coming” when asked about their dating lives at Thanksgiving.

☕️ Colony Lab Boosts Avalanche

Colony Lab, an Avalanche ecosystem developer and accelerator, has donated $10 million to bolster the long-term health and sustainability of the Avalanche network.

"As we channel a $10 million investment into the Avalanche ecosystem, we're not just growing Colony Lab – we're fostering the long-term potential of AVAX,” said CEO Elie Le Rest in a message to CoinDesk. “Avalanche understands that real blockchain growth comes from expanding its use cases, and its technology reflects this vision by creating a more inclusive and customizable blockchain landscape. We're thrilled to align with Avalanche's vision, and we're fully dedicated to sharing the rewards of our strategic move with our community."

As part of this effort, Colony Labs bought up 500,000 of Avalanche’s native AVAX tokens in the past several months, with the intent of using the tokens to set up validator programs to benefit the Avalanche ecosystem.

This marks one of Colony Labs’ largest investments, second only to tri-corner hats.

☕️ Big Pharma Meets AI

AstraZeneca, a pharmaceutical company, has just launched Evinova, a new, digital health branch that will utilize AI to design and run clinical trials.

“The future of medicine development can be accelerated with digital solutions,” said Pascal Soriot, AstraZeneca’s CEO, in an interview with Decrypt. “We believe Evinova’s combination of scientific expertise and track record in developing AI-enabled digital technologies at scale, provides a real opportunity to fundamentally improve patient care, drive healthcare transformation, and reduce carbon emissions.”

However, Evinova’s particular AI will be focused on streamlining clinical trials by analyzing cost and feasibility by researching the regional and historical data of a given trial site.

According to AstraZeneca’s predictions, the coming digital health market is projected to be a $900 billion industry by 2032.

We’ve always thought the one thing Big Pharma was missing was the cold, calculating presence of AI. And they’re finally starting to understand the most important part of pharmacological research, which is getting through the clinical trials as fast as possible.

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Spilling the Beans

Binance's Battle in Seattle 💥 🥊

Binance is the world’s largest crypto exchange.

And sometimes, when an institution becomes too large, with that status comes the erroneous belief that it’s too big to fail.

But it’s exactly this line of thinking that sunk the Titanic, and though Binance may not yet be at the bottom of the North Atlantic, she’s certainly taking on water.

Now, we’re getting ahead of ourselves.

Back in June of this year, the SEC charged Binance and its CEO Changpeng Zhao with 13 separate violations.

Chief among those violations was the misappropriation and commingling of customer funds.

It’s even been alleged that Changpeng Zhao and several other top Binance executives used those funds to go in on a luxury yacht.

Additionally, the SEC and the DOJ are working to prove that Binance’s U.S.-compliant branch, Binance.US, was not nearly as compliant as it claimed to be, instead illegally ushering American clients toward the offerings of Binance international.

Now, we’ve seen Binance.US gradually dismantled with hundreds of layoffs and the departure of its CEO.

And yes, we know the cogs of civil justice move laboriously slowly, but a reckoning has finally arrived at Binance’s door.

The company itself will have to pay $4.3 billion to settle the allegations, but far more interesting, Changpeng Zhao has been forced to step down and will plead guilty to money laundering at an arraignment in Seattle and pay his own $50 million fine.

For the sake of clarity, and it’s a naturally confusing crime, CZ actually violated anti-money laundering laws, which constitutes money laundering.

Now, in the wake of this news, Binance’s native BNB token has fallen over 8% at the time of writing.

But in typical degen fashion, on the same day the news of CZ’s guilty plea broke, someone created an unofficial CZ meme token which rocketed up 18,000% in value.

Shitcoins aside, what does the future hold for Binance?

$4.3 billion is not a paltry sum, and Binance, like Changpeng Zhao himself, has had a wildly fluctuating net worth.

It doesn’t seem wild to assume that there should be some sort of payment plan or safeguard in place to stop the US from financially vaporizing an international crypto exchange.

As for CZ? We know that he won’t be CEO again anytime soon. Under the current restrictions, CZ will be barred from involvement with Binance for three years after the exchange appoints an interim CEO. Anything after that is fair game.

But will CZ go to jail?

Well, we doubt that this will be as sensational of a trial as Sam Bankman-Fried’s.

The situation with Binance was more of a slow burn, and with less calamity comes less punishment.

Yes, CZ will have to pay a larger fine, and there’s probably an even larger fine waiting at the end of his trial in Seattle, but it stands to reason that CZ will be hit with a slap on the wrist rather than years of jail time.

So no, it’s not quite “Goodbye-nance” or “Ta-ta for Bi-now”, we’re currently at the “we’re just going to maintain a safe distance while this massive exchange gets it shit together… nance.”

Crypto 101

Staking-as-a-Service: These are platforms, such as Kraken, that serve as intermediaries for users to stake their crypto on a variety of protocols.

This removes both the exposure and most major complications that come with staking your crypto independently.

Crucially, the intermediary sends the staking reward to the staking provider before the user receives their portion of the reward.

The Last Sip

The Last Sip: If Changpeng Zhao does serve jail time, it would be societally irresponsible to place him anywhere other than in the same prison as Sam Bankman-Fried, and as cell-mates. Then the warden takes a bunch of pictures of them standing back to back, smiling but looking exasperated, and we air a live stream into their cell, Thursdays on ABC.

Stay Caffeinated,

Coffee & Crypto Team

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DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.