Crypto exchange Binance's CEO Changpeng Zhao (CZ);has been seeking;to reduce his majority stake in the exchange's U.S. arm, Binance.US, since last summer, according to a recent report from The Information citing people familiar with the issue.
The effort aims to enhance the company's reputation in the eyes of U.S. regulators amid the increased scrutiny against it in the country.
- The company executives believe that the bad reputation and CZ's majority stake could prevent the platform from obtaining certain regulatory licenses.
- Binance came under intense scrutiny by U.S. regulators over the last years.
- The firm and its;CEO;hit the headlines;in March when;the U.S. Commodity Futures Trading Commission (CFTC) filed a lawsuit against them with allegations of regulatory violations in seven counts.
- At the time, the CFTC further alleged that Binance engaged in proprietary trading activity with at least 300 house accounts connected directly or indirectly to CZ, arguing that those accounts were exempt from certain safeguards.
- Binance, the largest crypto exchange by trading volume, is also under scrutiny by the Internal Revenue Service (IRS), the Securities and Exchange Commission (SEC), and federal prosecutors in the U.S.
- The regulators expressed their concerns about a potential relationship of Binance.US with Binance.com many times, especially while opposing the $1.3B Voyager Digital acquisition deal before the subsidiary;terminated the agreement.
- In March, a;Financial Times report;citing internal company documents similarly pointed out that Binance hid its substantial ties with China for several years.
- Zhao is currently a Canadian citizen, even though he was born in China.
- Many regulatory agencies worldwide are concerned about his potential hidden ties with his country of birth for national security reasons.;