Changpeng Zhao (CZ), the founder of Binance.US, is reportedly contemplating methods to decrease his ownership in the firm. This development comes amidst a year of intense scrutiny from federal regulators in the United States. According to a May 11 report by The Information, CZ, who owns a majority stake in Binance.US, has been exploring options to reduce his influence since the summer of the previous year.
Binance: Under the Regulators’ Microscope
Over the past year, Binance and CZ have faced significant regulatory scrutiny in the U.S. In March, the Commodity Futures Trading Commission filed a lawsuit against Binance and CZ, accusing them of operating an “illegal” exchange with a “sham” compliance program. The firm was charged with deliberately bypassing U.S. law while engaging in a “calculated strategy of regulatory arbitrage for commercial benefit.”
Also Read: Binance, CZ, and Influencers Face $1 Billion Lawsuit
In response to these allegations, Binance maintained its compliance with regulations. It stated, “We have implemented a robust ‘three lines of defense’ approach to risk and compliance.” Despite this, the leadership at Binance.US is reportedly seeking ways to decrease CZ’s stake and control over the company. They are concerned that acquiring certain regulatory licenses may be difficult as long as CZ is the majority owner.
Implications for the Crypto Industry in the U.S.
The U.S. Securities and Exchange Commission (SEC) appears to be specifically targeting American-based crypto exchanges to align them with the stringent regulations applied to banks and stock brokerages. This move has led to a significant migration of major players, such as Coinbase, Gemini, Ripple, and Galaxy Digital, considering relocating offshore following recent SEC enforcement action. Other major exchanges, like Kraken and Bittrex, have already fully or partially ceased their services in the United States as the regulatory pressure continues.
