Key Takeaways
- CZ has reportedly been trying to reduce its stake in the U.S.-based exchange since last summer
- Earlier this year, CFTC sued Binance for allegedly violating U.S. derivatives laws
World’s largest crypto exchange Binance.US and its founder Changpeng Zhao (CZ) has been the subject of regulatory scrutiny over the years. As per a recent report by The Information, CZ has reportedly been trying to reduce its stake in the U.S.-based exchange since last summer.
Reportedly, following the Commodity Futures Trading Commission’s lawsuit against Binance for purportedly breaking U.S. derivatives laws, Binance.US executives have contemplated whether reducing Changpeng Zhao’s controlling stake could enhance the firm’s reputation with American regulators.
Last month, in a court filing, the CFTC alleged Binance violated eight provisions of a commodities trading law “designed to prevent and detect money laundering and terrorism financing.”In the complaint, the regulatory body sought disgorgement of profits, civil monetary penalties, registration bans and a permanent injunction against further violations.
CFTC then alleged that the exchange was “engaging in a calculated strategy of regulatory arbitrage to their commercial benefit.” CZ has called the C.F.T.C. lawsuit “unexpected and disappointing,” describing it as an “incomplete recitation of facts.” According to reports, executives at Binance.US are exploring options to decrease the stake and influence of CZ, the majority owner, amid concerns that regulatory licenses may not be granted as long as he retains control of the company.
Binance has long been dogged by allegations of money laundering and regulatory scrutiny. Earlier this year, Binance.US’s deal to purchase assets of defunct crypto lender Voyager Digital was opposed by New York and federal finance regulators stating it could prove discriminatory and unlawful.
Binance, established in 2017, quickly gained popularity by providing a platform for a diverse range of experimental cryptocurrencies and enabling users to engage in a form of high-risk, heavily leveraged speculation on cryptocurrency prices that is currently prohibited in the United States. CCData, a data analysis firm, reports that Binance accounts for approximately two-thirds of all cryptocurrency trades conducted globally.
