The past few days have been quite dramatic for the crypto community, especially with the biggest centralized cryptocurrency exchange, Binance, experiencing an unexpected transition in power when Changpeng Zhao (CZ) agreed to step down as Chief Executive Officer (CEO) of the exchange and pleaded guilty to Bank Secrecy Act violations.

Today’s article gives you a quick review of all the notable events in crypto last week. Let’s dive in…

Tether Freezes 225 million USDT tokens linked to Human Trafficking

Tether, one of the largest crypto companies known specifically for launching the USDT stablecoin, has assisted the United States Department of Justice (DOJ) in an investigation that required Tether to “proactively and voluntarily” freeze approximately 225 million USDT tokens stored in an external self-custodian wallet, which they believed was tied to an international human trafficking syndicate in Southeast Asia.

Tether was not alone in this investigation; crypto exchange and financial service company OKX and blockchain analysis firm - Chainalysis also played significant roles in investigating the Southeast Asia syndicate responsible for executing a pig butchering romance scam. The investigation leveraged cutting-edge blockchain analytical tools provided by Chainalysis to detect and track the flow of illegal funds through the blockchain.

“Through proactive engagement with global law enforcement agencies and our commitment to transparency, Tether aims to set a new standard for safety within the crypto space. Our recent assistance to the Department of Justice underscores our dedication to fostering a secure environment,” said Paolo Ardoino, CEO of Tether.

According to reports from Tether, this would be considered the largest-ever freeze of USDT in history. The frozen wallets are on the secondary market and are not associated with Tether’s customers.

Kraken Charged for Operating an Unregistered Securities Exchange by SEC

On Nov. 20, the U.S. Securities and Exchange Commission reopened its books against the leading crypto exchange, Kraken, charging the company for operating an unregistered securities exchange, broker, dealer, and clearing agency. The complaint, filed in federal district court in San Francisco, claims that Kraken was depriving its investors of the significant protection they needed by operating an unregistered entity and also alleges Kraken is violating the registration provisions of the Securities Exchange Act of 1934.

“We allege that Kraken made a business decision to reap hundreds of millions of dollars from investors rather than coming into compliance with securities laws. That decision resulted in a business model rife with conflicts of interest that placed investors’ funds at risk.” Gurbir S. Grewal, Director of the SEC’s Division of Enforcement

Additionally, the complaint also alleges that Kraken suffered from “deficient” internal controls and poor recordkeeping, making them responsible for mixing customer funds (approximately $33 billion worth of assets) with company funds and paying operational expenses from customers’ accounts.

The San Francisco crypto exchange responded to the complaint by reassuring its customers that none of the allegations proved that the exchange was a fraud, also noting that the “big dollar amounts” do not allege that the money was missing or misused. Kraken also pointed out that the SEC had made similar allegations against other top crypto exchanges, but the SEC could not particularly prove that there was any loss of customer funds.

“The allegation is hollow; there is no such thing as an exchange, broker, dealer, or clearing agency for 'investment contracts.' The SEC is demanding compliance with a regime that doesn’t exist," Kraken.

Ex-Binance CEO plans to invest more time in DeFi

On Nov. 21, the now-former CEO of Binance, Changpeng Zhao, agreed to step down from any executive role at Binance in compliance with the $4.3 billion settlement with the United States Department of Justice (DOJ). The agreement would allow CZ to retain his stake in Binance (considering he won’t be facing jail time), but he wouldn’t be permitted to hold an executive position at the company.

Later, CZ announced in an X (formerly known as Twitter) post that he would be handing over his executive obligations to the Global Head of Regional Markets, Richard Teng, making him the new CEO of the five-year-old crypto empire.

In the post, CZ also explained his plans now that he was no longer linked to his executive role in the company

“What’s next for me?” – CZ

He noted clearly that there was no plan to build another startup, but this would be an opportunity to take a break. He further expressed his current interest in Defi and Web3, stating that he was glad to have more time for DeFi investments.

“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. I am happy that I will finally have more time to spend looking at DeFi."

HECO Bridge hack leads to loss of over $86million

The cross-chain bridge, HECO Bridge, experienced a security compromise, which consequently led to the loss of funds. Blockchain security firm PeckShield alerted the crypto community in an X (formerly known as Twitter) post.

“Suspicious huge withdrawal of 10,145 ETH from Heco Bridge. Note the tx is initiated by the operator. Looks like a compromised operator?” PeckShield Alert on X

Justin Sun, founder of the Tron chain and affiliate to the HECO Bridge, responded to the incident in an X post.

“HTX and HECO cross-chain Bridge undergo hacker attack. HTX will fully compensate for HTX’s hot wallet losses. Deposits and Withdrawals temporarily suspended. All Funds in HTX are secure, and the community can be rest assured”

He went further to announce that the team was taking steps to investigate the situation – “We are investigating the specific reasons for the hacker attack. Once we complete the investigation and identify the cause, we will resume services.”

This incident raised eyebrows in the crypto community. HECO Bridge would be the second platform linked to Justin Sun that would be hacked this month. On Nov. 10, a crypto exchange owned by Sun, Poloniex, was hacked for $100 million. While the cause of the suspicious outflows from both platforms is not yet established, the crypto community speculates that it’s an inside job, while security analysts predict that it is due to compromised private keys.