Binance co-founder and CEO Changpeng Zhao, also the majority owner of Binance.US, has been trying to cut his stake in the American unit since last summer, The Information reported Thursday, citing two people familiar with the matter.
The move comes after U.S. regulators sued Zhao and Binance in March for allegedly violating American derivatives rules. Binance should have registered with the U.S. Commodity Futures Trading Commission years ago, the regulator said at the time. If Zhao, known as CZ, can cut some of his stake in Binance.US, it might help improve the company's standing in the eyes of U.S. regulators, according to one of The Information sources.
"Binance.US and Binance.com are separate and independent of each other," a Binance spokesperson told The Block. "We can't comment on behalf of BinanceUS or CZ as an individual and majority shareholder of BinanceUS." Binance.US did not immediately respond to a request for comment.
Binance.US behind Coinbase and Kraken
Binance operated in the U.S. until 2019. The company then set up Binance.US to focus on the market and comply with local regulations. Binance.US operates in most of the U.S., but doesn't have licenses in Texas and New York. It also doesn't have CFTC licenses to offer derivatives in the U.S. Binance.US executives are reportedly worried that the company may not be able to get certain U.S. regulatory licenses as long as Zhao is the majority owner.
Binance rival Coinbase, on the other hand, offers derivatives trading after it acquired the CFTC-registered derivatives exchange FairX last year.
Binance.US is currently behind Coinbase and Kraken in terms of trading volume, according to The Block's Data Dashboard. The main Binance exchange continues to be the world's largest crypto exchange.
It remains to be seen whether Zhao is able to cut his stake in Binance.US. Last year, the exchange raised its first-ever funding round worth over $200 million at a pre-money valuation of $4.5 billion. Investors included Foundation Capital, VanEck and Circle Ventures, but Zhao retained majority ownership of Binance.US.
Binance.US recently moved its headquarters from California to Florida, according to its website.
© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.