Oregon has become the latest state to take regulatory action against Binance.US, revoking its license to operate following former CEO Changpeng Zhao’s guilty plea to felony charges. This move marks the sixth state to either revoke, suspend, or refuse to renew the license of the cryptocurrency exchange, echoing a growing trend of state-level backlash.
States Take Action
Following Zhao’s admission of violating Anti-Money Laundering laws, states have increasingly scrutinized Binance.US’s operations. Florida initiated the trend in November by suspending the exchange’s license shortly after Zhao’s guilty plea. This was closely followed by Alaska and North Carolina, with both states taking similar measures in January. Maine and Connecticut also declined to renew the exchange’s license, citing regulatory concerns.
The Oregon Division of Financial Regulation cited the serious nature of Zhao’s felonies as the reason for the revocation, stating the decision was necessary to protect consumers in the state. The division emphasized that Binance.US is now prohibited from accepting money for transmission or holding or selling fiat or crypto for Oregon consumers.
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Licensing Challenges and Operational Impact
Binance.US has faced significant challenges across various states, lacking licenses in New York, Texas, Vermont, and Hawaii. The exchange also reports conflicting information regarding its operational status in Georgia and Ohio, further complicating its U.S. presence. Despite opening a regional hub in Georgia earlier this year, the license obtained does not extend to the exchange or transmission of virtual currency.
The repercussions of these licensing issues and regulatory actions have been profound for Binance.US. Christopher Blodgett, the chief operating officer, described the situation as a “near-mortal blow” in a court deposition, revealing that the exchange had to lay off over 200 staff members due to U.S. banks’ reluctance to collaborate with them.
Broader Legal Challenges
The operational challenges for Binance.US are compounded by legal troubles, including a lawsuit filed by the U.S. Securities and Exchange Commission (SEC) in June. The SEC’s lawsuit alleges that Binance.US failed to register as an exchange, broker, and clearing agency, and accuses it of lacking adequate controls to prevent manipulative trading practices, engaging in wash trading, and commingling funds with its parent entity, Binance.
As Binance.US navigates these extensive regulatory and legal challenges, the landscape for cryptocurrency exchanges in the U.S. continues to evolve, with significant implications for how these platforms operate and are regulated across different states.
