The future of Binance in the United States has become uncertain due to the recent regulatory scrutiny of its international business empire. With this in mind, the company is reportedly exploring ways to reduce Changpeng Zhao‘s, the founder and CEO of Binance, stake in Binance.US, the US-regulated branch. The hope is that this move will ease regulators’ concerns and reinforce the company’s commitment to comply with US regulations.
Zhao, also known as CZ, has reportedly been attempting to sell part of his stake in Binance.US since last summer, says The Information, citing two anonymous sources. According to the same report, Binance.US senior management believes that lessening CZ’s ownership stake in the company would significantly increase its chances of gaining the favor of US regulators. These concerns arise as the cryptocurrency industry in the United States faces increasing crackdown.
It has been suggested that CZ’s large stake in Binance.US could make it difficult, if not impossible, for the company to acquire the necessary licenses to operate legally in the United States. This perceived regulatory hurdle is driving the move to reduce his ownership stake.
Earlier this year, in March, CZ and Binance were sued by the Commodity Futures Trading Commission (CFTC) for alleged securities law violations. Among these accusations were claims that the exchange allowed US traders to trade crypto derivatives on its international platform. In response to the lawsuit, Binance has stated that the allegations are based on “an incomplete recitation of facts.” Meanwhile, CZ himself has expressed his surprise and disappointment over the lawsuit.
However, despite the efforts made by CZ to reduce his stake at Binance.US, questions about the effectiveness of this strategy persist. The issues raised by the regulatory crackdown extend beyond merely CZ’s ownership stake. They delve into deeper, systemic concerns surrounding transparency and adherence to regulatory norms on a company-wide basis.
Proponents of the proposed strategy argue that reducing CZ’s stake would help signal the exchange’s commitment to compliance with the United States regulations. Critics, on the other hand, may view this move as an inadequate response to the systemic issues that regulators have highlighted. In this regard, it remains uncertain whether the reduction of CZ’s stake will suffice to mitigate the regulatory concerns or whether more comprehensive measures will be needed.
In conclusion, Binance’s attempt to reduce the founder’s ownership stake in the US-regulated branch reflects the company’s understanding of the importance of compliance with local regulations. While it is clear that this strategy aims to improve regulatory sentiment towards the company, the ultimate efficacy of reducing CZ’s stake in avoiding a regulatory crackdown remains to be seen. As the cryptocurrency industry evolves, companies operating in this space must find a balance between fostering innovation and adhering to strict regulatory standards.
Source: Cryptonews
