It’s no secret that Binance.US has been under increased scrutiny from U.S. regulators, an issue that has caused the crypto exchange to look for creative solutions to some of its more pressing legal issues. Recently, according to The Information, Changpeng Zhao (CZ), a majority shareholder of Binance.US and its chairman, has been considering strategies to reduce his ownership stake in the crypto exchange, as part of a broader effort to gain approval from U.S. regulatory authorities and bolster the exchange’s reputation.
CZ and Binance.US Under U.S. Government Scrutiny
As the founder and majority shareholder of Binance.US, who is also known as CZ, Zhao has been under a microscope, drawing the attention of several U.S. agencies, including the Securities and Exchange Commission, Commodity Futures Trading Commission, Justice Department, and the Internal Revenue Service.
In a move that shocked the crypto community, the New York Department of Financial Services forced Binance to suspend its bank transfers in U.S dollars earlier this month, further intensifying the scrutiny on Binance.US and its relationship with CZ.
CZ Considers Ending U.S. Partnerships
In relation to the investigation, according to Bloomberg, CZ has been looking to end relationships with U.S. partners, including banks and service firms, delisting tokens issued by U.S.-based projects, such as Circle’s USDC stablecoin, and reassessing Binance.US’ venture investments. CZ also denied that the exchange was considering delisting U.S.-based crypto tokens on Twitter, claiming that blockchain has no borders.
It’s worth noting, however, that shifting ownership isn’t a new tactic for Binance.US. Reports claim that CZ began looking into strategies to divest from the crypto exchange last summer, prior to being subject to investigation by U.S. regulatory authorities.
Reducing CZ’s Stake Amid Regulatory Pressure
The Information also alleged that executives at Binance.US have been exploring creative solutions for reducing Zhao’s stake in the exchange as a way to reduce their regulatory burden. This could also help the exchange to separate itself from CZ’s own ties to the crypto space, along with his veiled residency and citizenship. Many wonder if this means that Binance will be looking to increase transparency in its operations.
Binance.US Denies Connection to Binance Amid Investigation
It is worth noting that Binance.US has always maintained that it has no connections to the company Binance and serves customers in the United States independently. However, chainalysis has recently revealed a high volume of transactions between the two exchanges, which could be part of the current investigations.
The ongoing investigation into Binance demonstrates the U.S. government’s commitment to ensuring its financial services policies apply to the crypto space just like any other industry. With the numerous probes into the activities of Binance.US, it remains to be seen if CZ’s attempt to reduce his stake in the exchange will be successful.
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