Binance's founder and CEO, Changpeng Zhao, has considered shuttering the US affiliate of the crypto exchange earlier this year to protect the broader global operations, according to a report by The Information. However, Zhao's decision was blocked by Brian Shroder, CEO of Binance.US.
CZ Tried to Shutter Binance.US
Though officially not confirmed, the board of directors of the US unit of Binance voted on the proposal to close the company. Though Zhao has no executive role in that US entity, he still sits on the board as the Chair. Binance refused to comment on the report.
Binance, the largest global crypto exchange in terms of trading volume, launched its US exchange in September 2019 after securing registration from the Financial Crimes Enforcement Network (FinCEN). The purpose of the US entity was to provide crypto trading services to US customers while keeping it independent from global operations.
Binance Is Facing Serious Charges
Meanwhile, the operations of Binance, specifically its US operations, have been actively under scrutiny by US agencies. Now, the crypto exchange, its US affiliates, and Zhao are facing several serious charges brought against them by both the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). The lawsuit brought by the SEC slaps 13 charges, including the operation of illegal trading platforms, offering unregistered crypto asset securities, and commingling customers' funds.
Since the lawsuits, Binance.US has trimmed down its operations by suspending its over-the-counter (OTC) trading platform and delisting several tokens. The US-based exchange stopped USD services and does not offer trading with only crypto pairs. Furthermore, the exchange reduced a significant number of its workforce.
A recent media report further repealed that Zhao was aware of wash trading happening on the US-based exchange.
Besides the US, Binance faces regulatory backlash in Europe and other jurisdictions. It deregistered Cyprus and UK entities and shuttered businesses in The Netherlands. Its French entity reportedly faces a probe for illegal operations and lapses around money laundering. Most recently, the financial market regulator in Nigeria labeled Binance as illegal and ordered it to stop services in the country.
This article was written by Arnab Shome at www.financemagnates.com.
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