Earlier, the court banned the businessman from leaving the United States before sentencing for sanctions violations and AML violations

Changpeng Zhao steps down as chairman of the Binance.US board

29.11.2023 - 09:54

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4 min

What’s new? Binance founder Changpeng Zhao has stepped down as chairman of the board of directors of the cryptocurrency exchange’s US division. It is claimed that the businessman has transferred voting rights to a trusted person and retains a “purely economic” interest in the company. Earlier, Zhao also stepped down as CEO of Binance to settle claims against the global platform by the US Department of Justice (DOJ) for violating sanctions and AML regulations. Binance.US emphasized that it operates independently of Binance and was not affected by these claims.

Источник: Twitter.com

What else is known? The global platform is currently in the process of settling claims from the DOJ’s anti-money laundering (FinCEN) and sanctions enforcement (OFAC) divisions, as well as the Commodity Futures Trading Commission (CFTC) for violating derivatives trading rules. The platform will pay a $4,3 billion fine and allow US officials on its supervisory board for five years.

Zhao himself also pleaded guilty to the violations and will face a trial next February, which could result in an 18-month sentence. Initially, the court allowed the businessman to fly to the UAE, where he lives with his wife and children, with the condition that he would return two weeks before the hearing. However, the DOJ requested a travel ban to prevent escape. Although Zhao’s lawyers tried to challenge this request, arguing that escape was impossible due to legal and reputational costs, the court sided with the DOJ.

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Although Binance.US is not included in these proceedings, it has also previously faced claims from the US Securities and Exchange Commission (SEC). In June, for instance, the regulator accused Zhao and both platforms of making unregistered offerings of securities and using customer assets for their own benefit.

The regulator initially tried to get Binance.US assets frozen to prevent their outflow offshore, but later withdrew its request under a pledge to limit the access of global Binance executives to the assets of US users.

After the lawsuit, Binance.US’ share of the US market fell below 1%. The media reported that Zhao wanted to reduce his stake in Binance.US to improve its reputation, and later unsuccessfully tried to liquidate the platform in order to protect the global exchange. According to journalists, only Binance.US CEO Brian Schroeder opposed the liquidation at the time, explaining that a sudden closure would harm customers. Later, amid mass layoffs, Schroeder also stepped down. Zhao himself later denied the story of the attempted liquidation of the exchange in the US.

So far, the proceedings with the SEC are not over: in September, the regulator accused the exchange of refusing to cooperate with the investigation. Moreover, according to journalists, officials are still looking for evidence of fraud on Binance.US. They allegedly believe that there is a backdoor on the exchange that allows stealing clients’ assets, just as it was in the case of the bankrupt crypto exchange FTX.

Schroeder has been replaced at Binance.US by Norman Reed. The new statement emphasizes that the exchange is operating normally and providing the usual range of services, and its experienced management team will ensure that the business continues to grow and work to “democratize the financial system.”

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