Binance founder Changpeng Zhao appears to be eyeing investments in data centers focused on AI as part of his exploration into new investment opportunities.

Ex-Binance boss Changpeng Zhao (CZ) reportedly engaged in multiple discussions with OpenAI CEO Sam Altman as he explores new ventures, despite the potential of facing three years in prison for allegedly permitting various money-laundering schemes on his exchange, the New York Times has learned, citing people familiar with the matter.

The details of Zhaos talks with Altman remain slim, with the sources only saying that the former Binance head is particularly interested in artificial intelligence. According to the report, Zhao first met Altman in 2023, before stepping down as a chief executive at Binance. After changes in leadership at OpenAI in late November, the people said Zhao and Altman held another round of talks.

In December 2023, Zhao confirmed during a meeting with Ronghui Gu, a computer science professor at Columbia University, that he had communicated with Altman. In an interview with the New York Times, Gu said that Zhao and Altman both believe that A.I. is going to help a lot in actualizing the development of technology and human knowledge.

Gu also added that the Binance founder mentioned that he was looking for opportunities to invest in the large data centers that power AI applications, though Zhaos preferred investment target OpenAI or its rivals remains unclear.

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

In an X post in November, Zhao publicly talked about his plans after his legal issues, mentioning his interest in investing in web3, decentralized finance, and artificial intelligence.

After that, my current thinking is I will probably do some passive investing, being a minority token/shareholder in startups in areas of blockchain/Web3/DeFi, AI and biotech.

Changpeng Zhao

Meanwhile, U.S. prosecutors seek a 36-month prison sentence for Zhao, citing the severity of his alleged crimes. They argue that such a punishment would deter Zhao and others from flouting U.S. laws for financial gain. Zhao, who pleaded guilty to violating the Bank Secrecy Act in November 2023, currently awaits sentencing, scheduled for Apr. 30. Despite being free on a $175 million bond, his request to travel to Dubai was denied by a U.S. judge due to concerns about his substantial wealth and potential flight risk.

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Binance's CZ in talks with Sam Altman to explore AI investments - crypto.news

When Changpeng Zhao faces a judge on Tuesday to be sentenced for violating US banking law, the event may look a lot like closure.

But it wont be.

Binance, the global crypto exchange Zhao founded and led from 2017 to last November, is still facing civil charges brought by the US Securities and Exchange Commission.

And so is Zhao.

While the US Department of Justice got Binance to plead guilty to facilitating money laundering for all manner of bad actors and pay $4.3 billion in penalties, the SECs litigation poses a grave threat to the companys future.

Thats because the regulator is alleging Binance is running an illegal exchange, brokerage, and clearing agency, as well as unlawfully listing digital assets that should be registered as securities.

That includes its own token BNB as well as its now defunct stablecoin, BUSD.

I just dont see Binance submitting to the yoke of federal regulators.

If Binance fails to get the case dismissed and then loses at trial, the company will probably retreat from the US rather than comply with obtaining all the licences it would need to keep operating, said Kevin OBrien, a partner at Ford OBrien Landy, and a former assistant US attorney.

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I just dont see them submitting to the yoke of federal regulators. It doesnt fit with their business model or their rhetoric, OBrien told DL News.

The 13-count lawsuit also alleges Binance committed fraud and lied to investors. Binance has denied the allegations. Like Coinbase, Kraken, and the Blockchain Association, the industrys trade association, Binance argues that its wrong to treat digital assets the same as traditional securities.

The company did not respond to requests for comment from DL News.

Theres a lot on the line, too, for the SEC and its hard-charging chair, Gary Gensler.

Unlike regulators in the European Union and other jurisdictions, Gensler has rejected the crypto industrys argument that digital assets deserve their own bespoke rules.

By pursuing litigation against Binance, Coinbase, Kraken, and other big crypto players, Gensler is intent on proving that existing US securities laws govern digital assets the same as stocks and bonds.

Tigran Gambaryan, a senior Binance compliance official, has been incarcerated for nine weeks in Nigeria.

Winning that battle may be why the SEC stood apart from its sister agencies when they settled with Binance last year.

On November 21, top officials of the Justice Department, the US Treasury Department, and the Commodity Futures Trading Commission stood shoulder to shoulder in Washington to announce their joint settlement with Binance.

The company admitted it had failed to implement money laundering controls and prevent militant groups, drug traffickers, and producers of child sexual abuse materials to process billions of dollars in transactions on the platform.

Zhao, 47, who also pleaded guilty and paid a $50 million penalty, may receive a 36-month prison term in a hearing scheduled for Tuesday in a federal court in Seattle. His lawyers have asked for probation.

For all the headlines, Binances settlement with the DoJ and CFTC did not damage its business.

Binance simply has to implement better know-your-customer controls, anti-money laundering practices, and offer futures contracts in a more compliant way, said Jonathan Schmalfeld, a lawyer at Polsinelli.

Indeed, Binance still commands 42% of the global market share in spot and derivatives crypto trading, and handles about $14 billion a day in volume.

But if the SEC were to get its way, the exchanges core US platform would be affected.

Binance isnt prepared, I would think, to concede that its products have been marketed in violation of the federal securities laws, OBrien said.

The SEC wants the courts to affirm its assertion that crypto assets are investment contracts and covered by the 1933 and 1934 legislation that established the legal rules for the modern capital markets.

Now the agency is expanding its focus to the infrastructure of decentralised finance with looming enforcement actions against Uniswap, the leading decentralised exchange, and wallet provider Metamask.

For the crypto industry, this is an existential moment. The fact that the SEC is targeting stablecoins, including BUSD, is especially crucial.

Gensler has moved on stablecoins because Congress has failed to get legislation off the ground. The EU and the UK, meanwhile, are steaming ahead with tailored regulatory frameworks.

Stablecoins arent intended to function like shares of Apple or Tesla, as investments, Schmalfeld said.

Theyre more like electronic cash, albeit cash whose value is backed by another asset such as the dollar or a US Treasury bill.

You cant go to a grocery store and buy a gallon of milk with $5 of capital stock, Schmalfeld said. You dont use it that way, because to transfer it, you go through the necessary intermediaries.

Trading a stablecoin the same as stock or bonds would obviate the instruments entire point, and kill the industry in the US, he said.

Thats why the SECs lawsuit against Binance is really a battle over whether or not you can use stablecoins or at least this stablecoin, BUSD, in the United States, Stephen Rutenberg, also a lawyer at Polsinelli, told DL News.

That probably wont bother Gensler, though.

For the most part, Gensler doesnt think much of this business is legit he calls them bandits, that theyre essentially lawless, OBrien said.

If they go out of business in the United States, thats fine, he welcomes that.

Joanna Wright covers regulation for DL News. Reach out to the author at joanna@dlnews.com.

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Binance's clash with the SEC is up next as CZ faces sentencing - DLNews

Cryptocurrency exchange Binance and former CEO Changpeng CZ Zhao have filed notice with the court in its case with the United States Securities and Exchange Commission to establish the governments position on stablecoins as a security.

In an April 25 filing in U.S. District Court for the District of Columbia, lawyers for Binance and CZ filed a Notice of Supplemental Authority, bringing the courts attention to the U.S. governments arguments in its criminal case against Mango Markets exploiter Avraham Eisenberg. In that case, prosecutors argued there was no factual basis for treating USD Coin (USDC) as a security or putting the question to a jury.

The Justice Department used the argument against USDC as a security in its case against Eisenberg, who was found guilty of fraud and market manipulation on April 18. Having the government claim that a stablecoin was not a security seemingly under the SECs regulatory reach could bolster Binances arguments in the civil case.

The scope of the argument seemed limited to USDC, while the SECs case against Binance included BNB (BNB) and the stablecoin Binance USD (BUSD). The lawsuit, filed in June 2023, alleged that the crypto exchange and CZ allowed unregistered offers and sales of BNB and BUSD, as well as Binances Simple Earn, BNB Vault and staking programs.

Related: Philippines SEC orders Apple and Google to remove Binance from app stores

Binances case with the SEC was ongoing at the time of publication, but the exchange and CZ settled with the U.S. Justice Department, Treasury Department and Commodity Futures Trading Commission in November 2023 for $4.3 billion. Zhao stepped down as CEO of the crypto exchange and pleaded guilty to one felony count as part of the deal. He is scheduled to be sentenced on April 30.

The crypto exchange remains under scrutiny from regulators and authorities across the globe. Two Binance executives were arrested in Nigeria after the firm said it intended to cease all transactions in the local fiat currency, the naira. Authorities in Canada alsofiled a class-action lawsuit against Binance on April 19, alleging the exchange sold unregistered crypto derivative products.

Magazine: Lazarus Groups favorite exploit revealed Crypto hacks analysis

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Binance wants the court to know US government's position on USDC - Cointelegraph

The International Criminal Police Organisation (INTERPOL) says fleeing crypto chief Nadeem Anjarwalla will be smoked out and extradited to Nigeria to face tax evasion charges leveled against him and his colleague, Tigran Gambaryan, who is still in the custody of security agents in Abuja, Nigerias political capital.

Garba Umar, Vice President of INTERPOL (Africa) Executive Committee, made this known on Channels Televisions Sunrise Daily programme on Tuesday.

He said the paper works for Anjarwalla to be returned to Nigeria has commenced.

According to the INTERPOL boss, if a fugitive escapes, there are processes in which that country will follow. INTERPOL will only give information, assist them and inform them about the bilateral agreements and conventions that were signed to extradite a fleeing fugitive and the process is ongoing and Nadeem is not an exception.

Be rested assured, we have all the cooperation and we are working on it and definitely, one day, he will be brought to justice, its just a matter of time. We have done all the paper works, Umar stated.

In March, the Office of the National Security Adviser (NSA) detained Anjarwalla and Gambaryan in relation to alleged speculation against the naira, and for allegedly causing the value of the Nigerian currency to nosedive against the greenback of the United States.

Subsequently, the government approached the court to compel Binance to publish the names of its Nigerian traders but the platform wont budge.

The government also filed tax evasion charges against the platform but the NSA office said Anjarwalla escaped from custody when he observed a Jumat prayer on Friday, March 22, 2024, in Abuja. The NSA office said Anjarwalla fled Nigeria using a smuggled passport.

The Nigerian Government subsequently launched a manhunt for him, contacting the INTERPOL.

Commenting on the matter on Tuesday, the INTERPOL chief said, As soon as this individual escaped, there was a massive manhunt for this individual. Many countries we believed he must have boarded a plane or go by road to, we contacted them and we got some certain information which is not possible to share on this platform.

Be rest assured, we located where he was, how he boarded, all information about him and how he landed. We have done that to make sure that he doesnt escape justice.

Until his escape, Anjarwalla, holds British and Kenyan citizenship, serves as Binances Africa Regional Manager. There have been reports that he fled to the East African country.

On whether Anjarwalla has been captured in Kenya or not, the INTERPOL chief said, Im not aware but what I can tell you is that the last destination I know on my record of this guy when he fled (Nigeria) was Kenya. That I can confirm to you.

Asked whether the fleeing Binance executive would be returned to Nigeria to face trial, he said, Yeah, once a red notice is issued, we circulate to all member countries within the 196 including where the fugitive is suspected to be hiding.

Now, it is not only morally right but it is legally right for the country to get him apprehended, inform the requesting country that the fugitive you are looking for has been apprehended and is in our custody. Can you come and take him over?

This is the process. He may be in Kenya, he may be in hiding, he might have even left Kenya but because of the notices we have given, wherever he is, he will be smoked out.

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Process To Extradite Fleeing Binance Chief Nadeem Anjarwalla Ongoing INTERPOL VP - Channels Television