Binance.US Seeks Means To Reduce Zhao’s Majority Stake

Amid the heightened regulatory scrutiny in the United States, Binance.US is looking to slash its founder, Changpeng Zhao’s stake in the firm. 

Changpeng Zhao, popularly known as CZ, is the founder and CEO of Binance and reportedly holds the highest stakes in the firm’s US subsidiary.  

A May 11 report revealed that CZ started the move to reduce his stake in the US-based cryptocurrency exchange last summer. That was the period when Binance witnessed increased probing by US investigators.

Regulatory Pressure Push Binance.US Execs Seeks To Reduce CZ’s Influence

Recall the crypto exchange came under intense scrutiny from the United States regulators for over a year. 

Binance and its CEO received a lawsuit from the Commodities Futures Trading Commission for alleged regulatory noncompliance In March. 

In addition, the regulator accused the exchange of willfully evading the US through a calculated strategy of regulatory arbitrage for commercial benefit. 

In response, Binance rejected allegations of noncompliance, adding that it implemented a robust approach to risk and regulatory compliance. 

However, this heightened scrutiny of the exchange and its CEO triggered concerns for structural changes. 

To that effect, Binance.US executives have been exploring ways to reduce Changpeng Zhao’s influence over the firm. 

They are concerned that acquiring some regulatory licenses may be near impossible as long as CZ remains the majority shareholder.

 Meanwhile, Binance remains silent and has yet to respond to requests for more comment. 

Crypto Faces Harsh Regulatory Atmosphere In The US

Binance.US’ fears seem valid considering its ordeal with US regulators since this year. In February, the SEC threatened to sue Paxos, the issuer of Binance USD (BUSD) stablecoin. The unresolved issues resulted in the New York Department of Financial Services ordering Paxos to stop minting BUSD.

It didn’t end there. The SEC blocked the approval of Binance.US’ bid to acquire the bankrupt lending firm Voyager Digital’s assets. 

The series of actions could lead one to believe the SEC specifically targets US-based crypto exchanges.

The watchdog has gone after many US-based crypto trading platforms such as Coinbase, Kraken, Buttrex, etcetera. 

Enthusiasts and top shots argue that the regulator is making desperate moves to tighten its reins on the crypto firms even without clear legislation for the assets class. 

In February, the SEC even sued Kraken for offering unregistered staking services to US customers. 

To settle its dispute with the regulator, Kraken paid a fine of $30 million and shut its staking services in the US.

In March, Coinbase received a Wells Notice from the SEC threatening to sue the exchange for offering unregistered securities. 

However, Coinbase repeatedly rejected claims that its platform lists financial security, calling out the SEC for failing to provide regulatory guidelines for crypto. 

The exchange recently sued the SEC, charging the regulator to provide regulatory guidelines for crypto assets.

These crackdown actions have increased uncertainty around the US regulatory atmosphere, causing top industry players to mull migration ideas. 

Recently, Coinbase’s CEO warned that the exchange could relocate outside the US if the current regulatory atmosphere remains.