In light of increased regulatory scrutiny on cryptocurrency exchanges in the US, Binance.US is exploring options to decrease the stakes of the well-known Changpeng Zhao, a prominent figure in the crypto community.
Since last summer, Changpeng Zhao, the co-founder and CEO of the world’s largest cryptocurrency exchange, Binance, has been trying to decrease some of his shareholdings in Binance’s US subsidiary.
Sources cited in a report by the Information suggest that Changpeng Zhao and Binance US are exploring ways to reduce CZ’s holdings in Binance US, as the company has faced increased scrutiny from US federal regulators since 2022.
Some of the key factors behind the reduction of CZ stake from Binance US
For the past 52 weeks, Changpeng Zhao has been under investigation by US federal regulators, which is still ongoing.
In late March, the Commodity and Futures Trading Commission (CFTC) sued Binance, the largest cryptocurrency exchange, and its CEO, Changpeng Zhao, for alleged violations of the derivative trading rule in a federal court in Chicago.
It’s been alleged that Binance and its CEO allowed US crypto users to trade crypto derivatives without registering as a US future exchange and failed to carry out the proper anti-money laundering processes, according to CFTC.
Following the allegation, Binance US executives have been trying to find a way to decrease Zhao’s ownership and control of the company. This is due to concerns that they might not be able to obtain specific regulatory permits as long as Zhao holds the majority stake.
In February, the Securities and Exchange Commission filed a lawsuit against Paxos, the issuer of Binance’s stablecoin Binance USD (BUSD). In addition, the regulatory agency prevented Binance US from acquiring assets of a bankrupt crypto lending firm called Voyager Digital.
The SEC appears to be focused on enforcing the same stringent restrictions applied to banks and stock brokerages for US-based cryptocurrency exchanges.
