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Changpeng Zhao

Regulatory heat prompts Binance’s US unit to reduce founder CZ’s controlling stake

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The executives at Binance.US are concerned that the lawsuit filed by US regulators against Zhao Changpeng may hinder the company’s ability to obtain certain licenses.

In March, the CEO of Binance, Zhao Changpeng, and the company were sued by the US Commodity Futures Trading Commission for supposedly running an “illegal” exchange and a compliance program that was deemed to be fake.

According to two sources familiar with the matter, both the US regulators and Zhao Changpeng, the founder and majority owner of the company, have been exploring options to decrease his stake in the company.

Since last summer, Zhao, who also serves as the company’s CEO, has been attempting to sell some of his shares. In March, the US Commodity Futures Trading Commission (CFTC) filed a lawsuit against the company and Zhao, claiming that the exchange was operating illegally and that its compliance program was a fake.

The US Commodity Futures Trading Commission (CFTC) accused Binance, its former top compliance executive, and Zhao Changpeng of deliberately evading US law and employing a calculated strategy of regulatory arbitrage to benefit the company commercially.

Following the lawsuit, leaders at Binance.US have been discussing the possibility of reducing Zhao’s stake in the company in order to improve its relationship with US regulators, as stated by The Information.

Binance.US executives are worried that having Zhao as the majority owner may prevent the company from obtaining certain regulatory licenses in the US. At the time of writing, Binance.US has not responded to Reuters’ request for comment.

CFTC Charges Binance and Its Founder

On March 27, 2023, the Commodity Futures Trading Commission made an announcement that it had taken legal action against Changpeng Zhao and three entities that run the company, filing a civil enforcement action in the US District Court for the Northern District of Illinois.

The charges were for multiple violations of the Commodity Exchange Act (CEA) and CFTC regulations. The lawsuit also accused Samuel Lim, the company’s former chief compliance officer, of aiding and abetting the company’s violations.

According to the complaint, the company’s Holdings Limited, Holdings (IE) Limited, and Binance (Services) Holdings Limited (collectively referred to as “Binance”) operate the company’s centralized digital asset trading platform through a deliberately opaque common enterprise. Zhao serves as Binance’s owner and CEO.

The defendants are accused of intentionally disregarding the provisions of the CEA while pursuing a regulatory arbitrage strategy for their commercial benefit. The CFTC is seeking disgorgement, civil monetary penalties, permanent trading and registration bans, and a permanent injunction against any further violations of the CEA and CFTC regulations in its ongoing legal action against the defendants.

Binance CEO Addresses Few Key Points On The CFTC Complaint

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In an extraordinary turn of events, the CFTC filed a complaint against Binance, alleging “Willful Evasion” of U.S. regulations and the sale of unregistered crypto derivative products.

Filed in the U.S. District Court for the Northern District of Illinois, the regulator claimed that Binance has undertaken a “calculated approach to increase its presence despite publicly stating its purported intent to block or restrict customers located in the United States from accessing its platform”.

The CFTC alleged that Binance initially concentrated on seeking out retail customers in the United States.

It then gradually started to rely on staff and suppliers in the US and actively pursued lucrative and strategically valuable “VIP” customers, including institutional customers, who were based in the US.

The complainant also alleged that the top exchange has flouted federal laws by not registering with the commission.

Despite Binance’s solicitation of and reliance on customers located in the United States to generate revenue and provide liquidity for its various markets, Binance has never been registered with the CFTC in any capacity and has disregarded federal laws essential to the integrity and vitality of the U.S. financial markets.

Changpeng Zhao, also known as C.Z., the CEO of Binance, responded by making a public statement on its website.

C.Z dismissed the CFTC’s civil lawsuit as an ” incomplete recitation of facts” and called it unexpected after cooperating with the agency for more than two years.

Binance Would Come Out With A Detailed Response Soon

While stating that a full response would be given in due course, the CEO also addressed a few major concerns in the blog.

In response to the charge that the exchange secretly permitted US users, CZ argued that the firm adheres to the highest standards in KYC and AML, and has blocked US users based on their nationality [KYC], IP [including VPN endpoints outside of the US], bank and blockchain deposits and withdrawals, and more.

In addition to that CZ revealed that employees are subjected to a 90-day no-day-trading rule, which prohibits them from selling or buying coins. Staff is not allowed to trade in futures as well.

Since the FTX meltdown, regulators have stepped up their enforcement campaigns against significant players in the crypto market, as evidenced by actions like Coinbase’s wells notice, Kraken’s suspension of US staking offerings, Do Kwon’s arrest, and TRON’s Justin Sun lawsuit.

However, a top exchange like Binance getting hammered has sent panic in the sector with some calling it as a dark day for crypto. The news caused Bitcoin, to drop below the $27k level and is still down by 3% at press time.

Binance Mints TUSD While Price Of $TRU Rises By 200%

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Binance, the famous cryptocurrency exchange, has created roughly $50 million worth of TrueUSD just days after rumours surfaced that Paxos and Binance USD (BUSD) were under regulatory review by US authorities (TUSD).

Data from Etherscan indicates that the transaction occurred on February 16. It also occurs two days after Binance CEO Chanpeng “CZ” Zhao stated in a Twitter Space on February 14 that Binance would seek to “diversify” its stablecoin holdings away from BUSD.

CZ had previously stated that the recent regulatory action by the United States Securities Exchange Commission and the New York Department of Financial Services over the long term may lead to a fall in the dominance of U.S. dollar-backed stablecoins despite making nearly $50 million in TUSD from the TrustToken platform’s smart contract.

CZ said,

“I think with the current stances taken by the regulators on the U.S. dollar-based stablecoin, the industry will probably move away to a non-U.S. dollar-based stablecoin, back to algorithmic stablecoins.”

He further added,

“There’s multiple agencies putting applied pressure there. It is just going to shrink the U.S. dollar-based stablecoin market.”

CZ stated that they are now investigating alternative choices after being motivated to search for other options in various locations.

While the CEO noted that Binance would extend greater support for USD Coin (USDC) and Tether (USDT) in the near future in the hope that BUSD “winds down over time,” he also mentioned that they are now working to investigate new stablecoins based on the euro and the Japanese yen.

CZ stated that the existing circulating quantity of BUSD is there and safe, and when more individuals want to redeem, they will be burned in regards to BUSD.

Interestingly, the CEO of Binance also said that he was never overly optimistic about the BUSD stablecoin’s success.

He stated,

“To be honest BUSD was never a big business for us, when we started I actually thought the BUSD project may fail, so we actually don’t have very good economics on that collaboration.”

Binance Auto-Converts TUSD to BUSD

TUSD was an interesting stablecoin that Binance auto-converted to BUSD in September to improve liquidity and capital efficiency for its users. Additionally, USDC and USDP Stablecoins were automatically converted to stablecoins (USDP). In a few weeks, this increased BUSD’s market share in stablecoins from 10% to 15%.

TUSD was introduced by TrustToken on March 5, 2018. It is present on the Tron, Polygon, Avalanche, and Ethereum networks.

Every time a buyer wires USD to a third-party escrow account holding USD deposits on behalf of Prime Trust, new TUSD are created. The trader’s designated ERC-20 or BEP-2 wallet address will receive TUSD, which will then be transferred there in a 1:1 ratio to any USD that was sent there.

Binance CEO To Distance Himself From BUSD: Details

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Following comments made on Tuesday by Changpeng Zhao (CZ), CEO of Binance, regarding the cryptocurrency exchange’s connection to the well-known Paxos Trust Co.-issued token, the Binance USD (BUSD), the third-largest stablecoin by market size, has returned to its intended $1 peg.

After falling to a two-year low of $0.9950 on Monday after the New York Department of Financial Services (NYDFS) ordered Paxos to halt producing more of the tokens, BUSD, which is backed by short-term treasuries and cash-like assets, surged to $0.9997 in the early hours of Wednesday in Europe.

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BUSD depegged earlier this week but is gradually regaining its peg. (TradingView)

On Tuesday, during a Twitter Spaces, CZ said,

“BUSD is not issued by Binance…. We have an agreement to let them [Paxos] use our brand, but that’s not something that we created.”

As some crypto aficionados noted earlier this week on Twitter, Zhao’s remarks certainly helped traders’ perceptions of the tokens.

Since Monday, Paxos has burnt more than $700 million in BUSD tokens.

Talking about the current support for other stablecoins, CZ said,

“With BUSD gone, BUSD slowly winding down over time, we will continue to work with more stablecoin issuers or creators.”

Binance CEO: Stablecoins To Move To Non-Dollar

On February 14th, Binance CEO Changpeng Zhao (aka CZ) said that the cryptocurrency sector might switch to stablecoins that aren’t pegged to the dollar. Stablecoins based on the Euro, Yen, or Singapore Dollar are likely to be adopted, claims CZ. According to CZ, the change will lessen the dependency on stablecoins with US Dollar backing.

CZ’s response is in response to a question on the cryptocurrency sector’s usage of gold as a unit of measurement rather than the US dollar. Utilizing gold “makes sense,” CZ concurred. But the vast bulk of expenditures are still made in fiat money. Stablecoins backed by the US dollar are still important because the majority of investors calculate their investment returns in dollars.

According to the CEO of Binance, the recent U.S. government actions against U.S. dollar stablecoins will probably force the global cryptocurrency market to rely on other currencies like the euro, yen, and Singapore dollar to support stablecoins.

The founder of Binance also said that algorithmic stablecoins might have a bigger impact on the cryptocurrency industry in the future. The hazards associated with algorithmic stablecoins, however, are different from those associated with fiat-backed stablecoins, he said. Consumers should be aware of these risks as well as the fiat-backed stablecoin reserves, in CZ’s opinion.

Binance And WazirX: The Clash Of Crypto Exchanges

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According to a blog post on Friday, Binance has requested Zanmai Labs, the company running the Indian cryptocurrency exchange WazirX, to negotiate terms for withdrawing any remaining funds stored in Binance wallets.
The answer purports to allay concerns about what would happen to customer funds if Binance and WazirX decided to cancel their partnership.

Binance stated,

“As an exception, we have invited Zanmai to work out arrangements with us to withdraw any remaining assets in the relevant accounts after 3 February. However, the responsibility ultimately lies with the Zanmai team to make the withdrawals expeditiously.”

However, it has been reported that WazirX has not responded yet.

Did Binance Lie About Ownership Disputes At WazirX?

The ownership of WazirX was undisputed in November 2019 after Binance, the largest cryptocurrency exchange in the world by trading volume, announced that it had acquired the Indian exchange in a blog post. Executives from WazirX openly discussed the acquisition. The narrative began to shift, though, when WazirX got into trouble with the Indian authorities last summer. Indian authorities searched WazirX’s Mumbai office in the first few days of August on the theory that the exchange had assisted 16 fintech companies in money laundering.

Binance moved right away to officially disassociate itself from WazirX. The original announcement of the acquisition on the former’s blog was changed to reflect that the deal was “limited to an agreement to purchase specific assets and intellectual property.” Changpeng Zhao (CZ), CEO of Binance, stated in a tweet on August 5 that the company “does not own any equity in Zanmai Labs, the entity operating WazirX.” A representative for CZ’s firm told the local media that the claims that the CZ-led-firm owned WazirX were “lies.”

The ownership of the Indian exchange was the subject of months of public back and forth between WazirX and Binance, during which the latter maintained that the transaction never actually happened. Officials from WazirX said that it did and that they had proof, however, they never released it.

In the early morning hours of January 26, an Indian national holiday, Binance delivered WazirX a letter stating that the Indian exchange must comply with two conditions by the end of the month or face having its service agreement with WazirX terminated by CZ’s exchange by February 3.

First, CZ’s exchange instructed WazirX to repudiate previous claims that CZ’s exchange controlled WazirX by publishing a pre-written “clarificatory statement” that was provided by CZ’s firm. WazirX was also compelled to remove all references to CZ’s firm from its terms of service.

Binance Increases OG $1B To Another Billion As Crypto Recovery Fund

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Changpeng “CZ” Zhao, CEO of Binance, first stated that his exchange is establishing an industry recovery fund to aid in the sector’s reconstruction.

According to CEO Changpeng “CZ” Zhao, Binance is aiming for a $1 billion or more recovery fund to buy troubled crypto assets, which was previously revealed.

According to the news outlet, CZ said,

“If that’s not enough we can allocate more.”

Following the demise of FTX and its CEO Sam Bankman-Fried, CZ has emerged as a significant player in the sector over the past few months, solidifying his status as a significant leader. On Twitter earlier this month, he voiced his worries about FTX and abandoned a proposal to buy it to help it out of its financial difficulties.

A number of businesses, including lender BlockFi, are reportedly planning for bankruptcy as a result of the industry-wide effects of FTX’s insolvency.

Binance will be introducing a recovery fund “to aid projects who are otherwise healthy, but in a financial problem,” CZ stated last week.

According to CZ on Thursday, the exchange will have a “loose approach where different industry players will contribute as they wish.” A thorough blog article will shortly be published.

Binance CEO Announces Additional Allocation

The industry recovery fund at the cryptocurrency exchange Binance has received an additional $1 billion in funding, bringing the total amount of the fund to almost $2 billion.

“CZ”, CEO of Binance, made the additional allotment public on Friday.

A day after CZ stated that Binance is aiming for $1 billion for its crypto recovery fund, the size has increased. Along with other well-known cryptocurrency businesses, Aptos Labs and Jump Crypto joined CZ’s initiative and will each make a $50 million donation to the fund.

The industry would be supported and troubled crypto assets would be purchased using the recovery fund. Since the beginning of the year, the cryptocurrency market has experienced a sharp downturn, which has caused a number of crypto enterprises to close their doors.

BTC is currently trading 1.6% lower during the day and is hanging around $16,400 at the time of writing, indicating that the cryptocurrency market is still under pressure.

Here’s What Binance’s CZ Has To Say About SBF

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The bankruptcy of reputable cryptocurrency exchange FTX has caused complete turmoil in the industry. Binance agreed to make a non-binding contribution to the troubled business earlier this month. Then, though, it quickly changed its mind and said that it was powerless to do anything about the problems.

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Binance CEO, CZ

Changpeng Zhao, the co-founder and CEO of Binance, recently lambasted Sam Bankman-Fried, the outgoing CEO of the insolvent exchange FTX. Zhao was asked to comment on a tweet sent by SBF on Thursday that referred to him as a “sparring partner” at the Milken Institute’s Middle East and Africa Summit.

Binance’s CZ Believes That SBF Should Have Worked On Other Things

Speaking on the same, CZ said,

“When he tweets about a sparring partner, his house is burning and all this is happening, he’s losing focus… That day when he tweeted that, he should have been working on other things. He should not be writing tweets.”

He further added,

“… he never told me I was his sparring partner. I’m actually not sure if that tweet was aimed at me or us (Binance).“

Further asserting that “only a psychotic can post that message,” the Binance CEO claimed that he had never seen other exchanges as direct rivals. More so because cryptocurrency was still in its infancy. He went on to say more, saying,

“We haven’t even reached 1% adoption. We can grow the industry 100x… We never view other exchanges as sparring partners or competition—it’s not a boxing match.”

Zhao clarified the situation further by claiming that Bankman-Fried was the one who approached him just as FTX was about to collapse. He continued by saying that when Bankman-Fried approached him, they knew he was “desperate.”

When SBF first contacted CZ, the latter believed he was going to request an OTC agreement to buy the FTT tokens in order to reduce market commotion. The former FTX CEO did, however, “quite rapidly indicate that they’re in significant danger, and they’re seeking for a buyout” on the call. CZ added,

“It didn’t take us very long to figure out there were way bigger problems [at FTX] than we imagined.”

Binance CEO Met President Of Côte d’Ivoire For Crypto Inclusion

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Binance CEO Changpeng Zhao a.k.a CZ was in Côte d’Ivoire recently to discuss the prospect of including crypto activities on commercial exchanges in the West African nation.

After enduring regulatory pressure from the South African region last year and halting its futures trading service, Binance’s next destination was to expand in the West African crypto market.

On 6th July, CZ retweeted a Twitter post that showed him meeting with the nation’s president Alassane Dramane Ouattara.

According to the govt website, the interview with the Binance founder at the Palace of the Presidency of the Republic, focused on economic and financial issues related to access to cryptocurrency.

Besides being the largest economy in the West African Economic and Monetary Union, Côte d’Ivoire has announced a slew of initiatives to draw business from around the world.

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Binance CEO Met President Of Côte d'Ivoire For Crypto Inclusion 4

At the recently concluded Africa CEO Forum, an event that saw the participation of nearly 2,000 political, business, and thought leaders, topics were mainly focused on emerging technologies that included digital payments, Blockchain, etc.

Since September last year, crypto adoption in Africa jumped by over 1,200%. Several crypto-focused firms and entrepreneurs see the potential for massive adoption in the region.

Africa’s crypto scene had a major turnaround when the Central African Republic [CAR] surprised everyone when it decided to quietly adopt Bitcoin as its legal tender after El Salvador.

Moreover, as we reported, CAR has recently launched the crypto hub project Sango on July 3 to bolster digital assets adoption in the country.

Meanwhile, Binance offered to share its expertise with Cambodian Fintech, a few days ago.

Binance Signs MOU With Cambodia’s Regulator

Crypto exchange Binance has signed a memorandum of understanding with the Securities and Exchange Regulator of Cambodia [SERC], according to a June 30 announcement.

As per the blog, Binance and SERC will work together to develop digital assets regulations in the country. SERC is looking to leverage Binance’s technical expertise and experience in the field to develop its own legal framework for the digital asset market.

It needs to be mentioned that cryptocurrencies are not regulated in Cambodia, and as such any unlicensed activity with regards to these asset class digital assets is deemed illegal.

The partnership assumed significance for the South Asian country, where any crypto-linked activity is highly prohibited since 2018.

Binance CEO Says That It’s Unethical to Block All Russians From Crypto Exchange

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The CEO of Binance, Changpeng Zhao (CZ), stated that their exchange complies with Russian user sanctions. Blocking all Russian accounts would be ‘unethical.’

CZ said in an interview with Bloomberg why Binance should not prohibit all Russian clients. “, he explained.

“It’s not our decision to make to freeze user accounts. Also, from an ethical point of view, many Russians don’t support the war, so we should separate the politicians from the normal people.”

He mentioned other significant sites, such as Facebook and Google, as examples, claiming that they did not ban Russian users and respected regulators’ requirements.

Binance is “strictly following the sanction guidelines, and anyone on the penalty list cannot utilize our exchange,” according to CZ.

This is accomplished through comprehensive user verification checks that guarantee sanctioned crypto addresses cannot transact on the site and are entirely barred.

He also stated that evading financial sanctions by Russians is not a “crypto-specific issue” and that banks and crypto firms follow the same standards.

When questioned if sanctioned Russian oligarchs may trade anonymously on the Binance platform, Zhao stated that the company relies on identification verification. Last August, the exchange strengthened its KYC requirements.

Binance and other exchanges follow sanctions

Binance had previously refused to comply with the request of the Ukrainian Vice Prime Minister to freeze the accounts of “ordinary” Russians.

Binance will not “unilaterally block millions of innocent consumers’ accounts,” according to a representative for the crypto exchange, according to Reuters. The spokesperson went on to say,

“Crypto was created to provide individuals all across the world more financial independence.”

Until recently, Binance has banned the accounts of Russian users who have been sanctioned. At the same time, Kraken exchange CEO Jesse Powell weighed in on the situation, saying that the company would only freeze customer assets if it were legally forced to do so.

Coinbase said on Tuesday that it “would not put a blanket restriction on all Coinbase transactions with Russian addresses.”

Putin’s actions have put a mountain of struggle not just for Ukrainians but also for fellow Russians. Dropping bombs and putting the lives of innocent people at stake is slowly backfiring.

Elon Musk calls Binance “shady”; CZ hits back by calling out Tesla’s software glitch

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Meme coins like Shiba Inu [SHIB] and Dogecoin [DOGE] have been flourishing. Elon Musk’s DOGE endorsement gave the altcoin a much-required momentum. The popularity of these assets has been emerging by the day and the need for crypto exchanges has never been more.

Recently, one of the world’s most popular crypto exchanges, Binance endured a bit of an issue with regard to Dogecoin withdrawals. Following a technical issue that prompted several DOGE transactions into the accounts of Binance users, the exchange froze DOGE withdrawals for a period of two weeks.

While several users continue to face issues in withdrawing their funds, Tesla’s Elon Musk went ahead and called out Binance’s CEO Changpeng Zhao. Replying to an article posted by a prominent news agency, Elon Musk asked CZ about the whole DOGE withdrawal scenario. He went up a notch and even suggested that the situation was “shady”.

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Elon Musk calls Binance "shady"; CZ hits back by calling out Tesla's software glitch 6

An array of Twitter users took this opportunity and went on call Binance shady for not letting people carry out withdrawals.

Elon Musk gets a reply from CZ himself

Binance has been at the forefront of the big crypto revolution. Despite the tiny regulatory glitch, Binance has managed to amass a wide range of fans. From implementing new upgrades and onboarding new assets to diving into markets across the globe, Binance is one of the most popular exchanges to exist. Therefore, CEO Changpeng Zhao didn’t hold back.

Back on November 12 itself, a Twitter account by the name Dogecoin Developers decided to shed light on the Binance and DOGE withdrawal situation. CZ tweeted,

In addition to this, CZ replied to Elon Musk’s initial comment and apologized for the inconvenience caused by the situation. CZ wrote,

“Elon, we are pretty certain it is an issue with the latest #doge wallet. We are in communications with the devs. Apologies for any inconvenience that may have caused you.”

Along with this, CZ called out Musk over a software glitch in Telsa that put the safety of nearly 12,000 US vehicles at stake.