Alaska and Florida regulators ban Binance.US after Zhao admits to violating AML rules

What’s new? Regulators in the states of Alaska and Florida banned the US arm of crypto exchange Binance from serving its residents. Thus, the Alaska Division of Banking and Securities in January refused to renew Binance.US’s license without announcing reasons. Florida’s Office of Financial Regulation issued an order suspending the exchange’s operations a week after its founder Changpeng Zhao pleaded guilty to violating US anti-money laundering rules on November 21 last year.

WSJ’s material

What else is known? In December, the US federal court found Zhao guilty of violating the Bank Secrecy Act. As part of the settlement agreement, Zhao stepped down as chairman of the board of Binance.US, transferring voting rights to a proxy, which removed his influence over the company’s governance process.

Earlier, he also stepped down as CEO of the global exchange, and Binance itself agreed to pay $4,3 billion in fines to regulators. The new head of Binance, Richard Teng, assured that the payment did not affect the financial condition of the exchange.

Despite the actions of the US government against the global exchange, Binance.US continued to operate in the country. In November, its representatives wrote that the platform remains operational and will continue to provide customers with the usual set of products and services.

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In late December, regulators in Arkansas, Illinois, and South Dakota allowed Binance.US to continue operating in the states on the condition that a reverse transfer of voting rights from a trustee on the board to Zhao would not be possible.

In early January, Binance.US hired a new chief compliance officer. He is Lesley O’Neill, who previously held a similar position at Prove Identity, a digital identity platform that serves banks.

At the same time, Binance.US’ share of the US market fell below 1% back in July 2023. The drop from 22% to 0,9% came after the Securities and Exchange Commission (SEC) filed a lawsuit over trading in unregistered securities. That proceeding is separate from the Treasury Department’s money laundering lawsuit, but the SEC believes Zhao’s admission that he violated AML rules increases his chances of winning.

Zhao’s sentencing in the money laundering case will be announced on February 23 this year, and he faces up to 18 months in prison. It also became known, that Zhao was trying to get permission to fly to the UAE due to the hospitalization of a loved one. As a guarantee of return to the date of the announcement of the verdict, he offered a pledge in shares of Binance worth $4,5 billion but was refused.