Binance.US allegedly fears that if CZ holds the majority of the stake, the firm may not receive necessary regulatory licenses.
As regulatory pressure in the United States escalates, Binance.US and its founder Changpeng Zhao (CZ), are exploring ways to diminish his majority share in the crypto exchange.
The US federal regulators have been relentlessly scrutinizing Binance.US and Changpeng Zhao over the past year, triggering the need for CZ to reconsider his stake in the company.
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According to The Information sources, the Binance.US founder has been contemplating reducing his shares since last summer.
This mounting scrutiny led to legal action in March when the Commodity Futures Trading Commission (CFTC) sued both Binance and CZ.
The Commission accused the crypto exchange of being "illegal" and having a "sham" compliance program. On top of that, CFTC claimed that the company was deliberately evading laws in the US "while engaging in a calculated strategy of regulatory arbitrage to their commercial benefit."
In response, Binance maintained its stance on regulatory compliance, emphasizing its "three lines of defense" approach to risk and compliance.
Since the lawsuit, Binance.US executives have reportedly been searching for ways to minimize CZ's stake and influence in the company. It is believed that the firm fears that it might struggle to obtain necessary regulatory licenses if CZ continues to hold majority ownership.
The Securities and Exchange Commission (SEC) has been targeting US-based crypto exchanges in a bid to enforce regulations similar to those governing banks and stock brokerages.
This aggressive approach resulted in the SEC suing Paxos, the issuer of Binance's stablecoin BUSD, halting its minting process. Additionally, the regulator blocked Binance.US's attempt to acquire assets from the bankrupt crypto lending firm Voyager Digital.
In light of the SEC's actions, several major players in the crypto world, such as Coinbase, Gemini, Ripple, and Galaxy Digital, are considering relocating their operations offshore.
Kraken and Bittrex have already either fully or partially closed their services in the United States, demonstrating the ongoing challenges the crypto industry faces in the US.