Crypto exchange Binance US and its founder Changpeng Zhao (CZ) are reportedly looking for ways to reduce his stake in the firm, amid harsh scrutiny from United States federal regulators over the past year.
The crypto executive – Binance US’ majority owner – has reportedly been trying to reduce his stake in the U.S.-based exchange since last summer, according to a report by the Information on May 11 citing people familiar with the matter.
Binance and Changpeng Zhao have seen intense scrutiny from United States federal regulators over the past year.
In March, the Commodity Futures Trading Commission (CFTC) sued Binance and CZ for operating what it alleged was an “illegal” exchange with a “sham” compliance program.
The firm was accused of willfully evading U.S. law, “while engaging in a calculated strategy of regulatory arbitrage to their commercial benefit.”
In response to the lawsuit, Binance has claimed regulatory compliance, telling Cointelegraph, “We have implemented a robust ’three lines of defense’ approach to risk and compliance,” at the time.
CZ responds to the CFTC on March 28. Source: Binance.com
Since then, Binance US bosses have reportedly been seeking ways to reduce CZ’s stake and influence over the company, worried that they may not be able to acquire certain regulatory licenses as long as CZ remains the majority owner.
Cointelegraph reached out to global exchange Binance who did not comment on the matter related to Binance US and CZ as an individual and majority shareholder of the U.S. exchange. Binance US did not respond by the time of publication.
Related:Here’s why CFTC suing Binance is a bigger deal than an SEC enforcement
In February, the SEC sued Paxos, the issuer of Binance’s stablecoin BUSD resulting in the end of minting. Meanwhile, the regulator blocked approval of a Binance.US bid for assets belonging to bankrupt crypto lending firm Voyager Digital.
It appears that the Securities and Exchange Commission (SEC) is specifically targeting American-based crypto exchanges to bring them under the same stringent regulations as banks and stock brokerages.
The result has been an exodus from the U.S. with major players including Coinbase, Gemini, Ripple, and Galaxy Digital among those eyeing a move offshore following recent SEC enforcement action.
Other major exchanges such as Kraken and Bittrex have already fully or partially shuttered services in the United States as the war on crypto continues.