Binance.US executives believe that reducing Zhao’s stake could actually help improve his standing in the eyes of US regulators.
According to the latest development, cryptocurrency exchange Binance.US along with its founder Changpeng Zhao is looking for ways to reduce his stake in the company amid a crackdown by federal regulatory authorities in the United States.
Currently, CZ is currently the majority shareholder of Binance.US, The Information reported, citing sources familiar with the matter. As we know, over the past year, Binance.US along with Changepeng Zhao have faced heavy scrutiny from US federal regulators.
Earlier this year in March, the US Commodity Futures and Trading Commission (CFTC) sued Binance.US along with its founder CZ for operating an “illegal” exchange running on a “sham” compliance program.
The commodity regulator said that Binance and its chief executive officer CZ had engaged in “deliberate evasion” of US laws, “while engaging in a calculated strategy of regulatory arbitrage for their own business advantage.” the a report Information adds that since then, leaders at Binance.US have discussed how reducing Zhao’s stake could help improve standing in the eyes of US regulators.
Binance.US executives are concerned that since Zhao has been named in the lawsuit by the CFTC, the company may not be able to obtain certain regulatory licenses it wants in the US, as long as CZ continues as the majority owner of the platform.
Binance is taking corrective action
In response to the lawsuit filed by the US Commodity Futures Trading Commission, cryptocurrency exchange Binance said it maintains regulatory compliance. The cryptocurrency exchange said it has implemented a robust “three lines of defense” approach to risk and compliance, in an effort to address existing regulatory concerns.
The CFTC is seeking a permanent ban on trading and registration on Binance due to its alleged failure to control potentially illicit transactions. Since July 2019, Binance has allegedly offered and executed commodity derivatives trading for clients in the United States. The CFTC stated that Binance’s compliance program was not effective, and its employees and customers were directed to bypass compliance controls to maximize the company’s profits. Rustin Behnam, Chairman of the Commodity Futures Trading Commission advertiser:
“For years, Binance has been known to flout CFTC rules, actively working to keep funds flowing and avoid compliance. This should be a warning to anyone in the digital asset world that CFTC will not tolerate willful avoidance of US law.”
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Bhushan is a financial technology enthusiast with a good knack for understanding financial markets. His interest in economics and finance has turned his attention towards the new emerging Blockchain technology and Cryptocurrency markets. He is persistent in the learning process and keeps himself motivated by sharing the knowledge gained. In his spare time he reads fantasy and thriller novels and occasionally explores his culinary skills.