According to media reports, Changpeng Zhao, the founder, CEO and the holder of maximum shares of Binance.US, is considering ways to reduce his company ownership. Sources familiar with the matter reveal that Zhao has been attempting to sell a portion of his ownership stake since the second quarter of last year.
However, as per the sources, the recent regulatory action against the world’s largest crypto exchange has triggered some action in this direction. Reportedly, the exchange’s top executives are debating whether Zhao’s ownership position should be reduced. If this is done in the near future, it would be to gain favor with U.S. regulators.
Simultaneously, current and former Binance.US executives are lawyering up against the Commodity Futures Trading Commission’s (CFTC) action. Former executive Catherine Coley asked James McDonald of Sullivan & Cromwell to represent her in the CFTC’s action against Binance.
In March, the CFTC targeted CEO Zhao and the COO, Samuel Lim. The regulator sued the exchange and Zhao alleging that the company intentionally offered unregistered crypto derivatives products in the U.S. against federal law.
The CFTC has charged several cases against Binance for violating federal laws related to offering futures transactions, illegal off-exchange commodity options, failing to register as a futures commissions merchant, designated contract market or swap execution facility, poorly supervising its business, not implementing know-your-customer or anti-money laundering processes and having a poor anti-evasion program.
Additionally, the regulator also implied that the exchange exploited crucial business connections to generate significant profits. Gretchen Lowe, CFTC Chief Counsel, called Binance’s actions “willful evasion of U.S. law,” citing some internal chats and emails.
Moreover, the regulator did not stop here and Rostin Behnam, chairman of the CFTC, at a fireside chat referred to the Binance management as “unsophisticated individuals.” He said that the exchange’s management knowingly operated outside of U.S. laws governing the exchange of commodities and futures.
Hence, sources suggest that Zhao’s involvement in the CFTC litigation worries executives at Binance.US. Top bosses reportedly fear that if Zhao stays as the primary owner, the company might not be able to get certain regulatory licenses.
While a lot of crypto firms operating in the country showed interest in relocation following the increased regulatory scrutiny, Binance does not intend to move as it considers the US a “hospitable location.” Notably, Kristin Johnson, CFTC Commissioner, stated that the agency is in conversation with Binance giving them the chance to clarify their actions.
However, CFTC is the only trouble that the exchange is struggling to deal with. As reported by Todayq News, the DoJ’s national security division is conducting an inquiry into whether Binance allowed Russian customers to access the exchange in violation of U.S. sanctions.
Additionally, Binance has recently expressed its struggle to conduct business in the U.S. amid a growing number of legal actions. According to the most recent Exchange Review Report, Binance recently has taken a significant hit.
In April, Binance’s Spot trading volume fell by 48.1% to $287 billion, making it the second-lowest monthly trading volume since 2021. The research also reveals that Binance’s market share has decreased for the second consecutive month, reaching 46.3%, the lowest level since October 2022.