Binance.US and CZ Look to Reduce His Stake Amid US Regulatory Scrutiny
- According to a report, CZ has been actively seeking to decrease his stake in Binance.US since last summer
- However, if CZ is compelled to retain majority ownership, Binance.US may be forced to exit the US market entirely
Binance.US, the US-based subsidiary of the world's largest cryptocurrency exchange, is reportedly exploring options to reduce the ownership stake of its founder and CEO, Changpeng Zhao (CZ), in response to heightened scrutiny from US federal regulators.
According to a report by The Information on May 11, CZ has been actively seeking to decrease his stake in Binance.US since last summer. Sources familiar with the matter revealed concerns among Binance.US executives that certain regulatory licenses might be unattainable as long as CZ remains the majority owner.
Binance and CZ have faced significant regulatory scrutiny from US authorities over the past year. In March, the Commodity Futures Trading Commission (CFTC) filed a lawsuit against Binance, alleging that the exchange operated an "illegal" platform with a deficient compliance program. Additionally, in February, the Securities and Exchange Commission (SEC) sued Paxos, the issuer of Binance's stablecoin BUSD.
As a result of this regulatory pressure, several major cryptocurrency exchanges are reportedly considering relocating their operations offshore. Coinbase, Gemini, Ripple, and Galaxy Digital are among those contemplating the move, while others have already scaled back or ceased their services in the US.
The future prospects for Binance.US and CZ remain uncertain. If CZ successfully reduces its ownership stake, it could potentially enable Binance.US to obtain the necessary regulatory licenses to continue operating in the US. However, if CZ is compelled to retain majority ownership, Binance.US may be forced to exit the US market entirely.
The ongoing regulatory scrutiny faced by Binance and other cryptocurrency exchanges poses a significant setback for the industry. The US market is one of the largest and most influential for cryptocurrencies, and the departure of major exchanges would be a significant blow. The ultimate regulatory framework for the crypto industry in the US remains to be seen, but it is evident that the current environment hinders innovation and growth.
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