Binance.US and its CEO, Changpeng Zhao, are actively exploring options to reduce his significant ownership stake in the company. This move is seen as an effort to enhance the company’s reputation and improve its standing with regulators in the United States.
According to sources cited by The Information on May 11, Zhao has been attempting to sell a portion of his stake since the summer of 2022. This development comes amidst an ongoing lawsuit filed by the U.S. Commodity Futures Trading Commission (CFTC) against Binance and Zhao.
The CFTC alleges that Binance operated an “illegal” exchange and maintained a “sham” compliance program. The lawsuit specifically targets Binance, Zhao, and Samuel Lim, the former compliance chief, accusing them of deliberately evading U.S. laws and engaging in activities outside the U.S. to evade CFTC regulations. These activities allegedly involved structuring entities and transactions to bypass registration requirements and providing U.S. customers with instructions on circumventing compliance controls.
Even before the CFTC lawsuit, both Zhao and Binance.US were already working on reducing his stake. However, since the lawsuit was filed, company executives have been discussing how this move could potentially improve the company’s image in the eyes of U.S. regulators.
Binance.US executives have expressed concerns that as long as Zhao, who is named in the lawsuit, maintains a majority stake, it may hinder the company’s ability to obtain the desired regulatory licenses in the U.S., as reported by Reuters, citing The Information.
Having a controlling stake means owning a significant portion, usually over 50%, of a company’s shares. With his controlling stake, Zhao wields considerable power and influence over Binance’s operations and strategic decisions.
At the time of writing, Binance.US had not responded to requests for comment regarding this matter. The potential reduction of Zhao’s ownership stake in the company signals a proactive effort by Binance.US to address regulatory concerns and strengthen its position in the U.S. market.
