The executives at Binance.US believe that reducing Zhao’s stake could help in actually improving the standing in the eyes of the US regulators.
As per the recent development, crypto exchange Binance.US along with its founder Changpeng Zhao is looking at ways to reduce his stake in the company amid a strong crackdown by the United States federal regulatory authorities.
Currently, CZ is the majority stakeholder currently in Binance.US, as reported by The Information citing sources familiar with the matter. As we know, over the past year, Binance.US along with Changepeng Zhao has been facing major scrutiny from the US federal regulators.
Earlier this year in March, the US Commodities and Futures Trading Commission (CFTC) sued Binance.US along with its founder CZ for operating an “illegal” exchange running on a “sham” compliance program.
The commodities regulator said that Binance and its top executive CZ have been involved with the “willful evasion” of US laws, “while engaging in a calculated strategy of regulatory arbitrage to their commercial benefit”. The report from The Information adds that since then, the leaders at Binance.US have been discussing how reducing Zhao’s stake could help in actually improving the standing in the eyes of the US regulators.
The executives at Binance.US worry that since Zhao has been named in the lawsuit by the CFTC, the company might not be able to acquire certain regulatory licenses that it wants in the US, as long as CZ continues as the majority owner of the platform.
Binance Takes Corrective Measures
Responding to the lawsuit by the US CFTC, crypto exchange Binance said that they have been maintaining regulatory compliance. The crypto exchange stated that it has implemented a robust ‘three lines of defense’ approach to risk and compliance, in an attempt to address the current regulatory concerns.
The Commodity Futures Trading Commission is pursuing a permanent ban on trading and registration for Binance due to its alleged failure to control potential illicit transactions. Since July 2019, Binance has supposedly provided and executed commodity derivatives transactions for US customers. CFTC has stated that Binance’s compliance program has not been effective, and its employees and clients have been directed to bypass compliance controls to maximize corporate profits. CFTC Chairman Rostin Behnam stated:
“For years, Binance knew they were violating CFTC rules, working actively to keep the money flowing and avoid compliance. This should be a warning to anyone in the digital asset world that the CFTC will not tolerate willful avoidance of US law.”
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