Founder Changpeng Zhao seeks to reduce stake in Binance.US amid regulatory scrutiny
Changpeng Zhao is the founder, majority owner, and chair of Binance, a global crypto exchange, as well as the CEO and co-founder of Binance.US. Reports suggest that Binance.US and CZ are seeking ways to reduce his stake in the US-based exchange as it faces intense scrutiny from US federal regulators over the past year. The Information reported on May 11, citing people familiar with the matter, that the crypto executive has been trying to reduce his stake in Binance.US since last summer.
Regulatory issues for Binance and CZ
Binance and CZ have been under intense scrutiny from US federal regulators over the past year. In March, the Commodity Futures Trading Commission (CFTC) sued Binance and CZ, accusing them of operating an “illegal” exchange with a “sham” compliance program. The firm was accused of willfully evading US law while engaging in a calculated strategy of regulatory arbitrage to their commercial benefit. In response, Binance claimed regulatory compliance and implemented a robust three lines of defense approach to risk and compliance.
Since then, Binance.US bosses have reportedly been seeking ways to reduce CZ’s stake and influence over the company, concerned that they may not be able to obtain certain regulatory licenses as long as he remains the majority owner.
Response from Binance and CZ
When Cointelegraph reached out to Binance regarding the matter related to Binance.US and CZ, the global exchange did not comment. Binance.US did not respond to inquiries by the time of publication.
SEC targeting American-based crypto exchanges
The Securities and Exchange Commission (SEC) appears to be specifically targeting American-based crypto exchanges, aiming to bring them under the same stringent regulations as banks and stock brokerages. This regulatory scrutiny has led to an exodus from the US by major players, including Coinbase, Gemini, Ripple, and Galaxy Digital, who are now considering a move offshore. Meanwhile, other major exchanges such as Kraken and Bittrex have already fully or partially shuttered services in the US as the war on crypto continues.
Conclusion
Binance and CZ are facing regulatory scrutiny in the US, with reports suggesting that CZ is seeking to reduce his stake in Binance.US. The SEC is targeting American-based crypto exchanges, which has led to an exodus from the US by major players, including Coinbase, Gemini, Ripple, and Galaxy Digital. The regulatory landscape for crypto exchanges in the US is uncertain, with major exchanges such as Kraken and Bittrex having already fully or partially shuttered services in the US.
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