Binance US, the troubled subsidiary of the world’s largest cryptocurrency exchange Binance, continues to grapple with regulatory challenges in the United States following its former boss Changpeng ‘CZ’ Zhao’s guilty plea.
Binance US Lost Operational Licenses in Alaska and Florida After CZ Pleaded Guilty
On Thursday, The Wall Street Journal reported that financial regulators from Alaska and Florida ordered the exchange to cease operations in the states, barring the platform from longer serving their residents.
Earlier this month, the Alaska Division of Banking and Securities denied the renewal of Binance US’s license, which had already cast doubts over the exchange’s continued operation in the Last Frontier state. The regulator argued that the company’s ownership structure did not meet the requirements for renewal.
Meanwhile, Florida’s Office of Financial Regulation issued an emergency suspension order against the exchange’s money transmitter license, stating that the platform’s continued operations constituted “an immediate danger to the public health, safety, and welfare.”
According to reports, the suspension order came a week after Binance co-founder CZ pleaded guilty to US Anti-Money Laundering (AML) policy violations in November 2023.
Binance Reached a $4.3 Billion Settlement with the US Government in November
Late last year, the US Department of Justice announced a $4.3 billion settlement with Binance. Despite his company denying wrongdoing, CZ pleaded guilty to failing to implement a strong AML program on the exchange and violating the Bank Secrecy Act.
As part of the settlement deal, Zhao accepted a $50 million fine and agreed to step down from his role as CEO of Binance US. CZ also exited his role as chairman of the company’s Board of Directors, transferring his voting rights to Norman Reed, the US-based crypto exchange’s chief executive.
Zhao was also replaced as CEO of the Binance global exchange by Richard Teng, former head of the crypto giant’s Middle East and North Africa regional markets.
However, the Floridian and Alaskan regulators were not convinced by the agreement as they argued that CZ’s guilty plea made him unsuitable to control Binance US as he still held approximately 80% of the company’s shares.
Despite all the regulatory actions against its global exchange, Binance US has managed to strike a deal with regulators in Arkansas, Illinois, and South Dakota to continue operations in the states. A key condition in the agreement was to distance CZ from the exchange’s decision-making processes.
The settlement also requires Binance US to secure a depository account at a federally insured banking institution and make the transfer of CZ’s voting rights irrevocable no later than June 30, 2024.
CZ Faces Upto 18 Months in US Prison if Found Guilty
Following his guilty plea, Zhao attempted to pledge his $4.5 billion stake in Binance US as security to be allowed to travel back to the United Arab Emirates (UAE), where he is a citizen, temporarily.
However, Judge Richard Jones of the US District Court for the Western District of Washington, who is presiding over the case, reportedly denied the request in a closed-door hearing held on December 29.
The crypto billionaire, who is currently out on a $175 million bond but confined to the US, faces up to 18 months in prison for the crimes he’s committed. Judge Jones ordered the former Binance boss to remain in the country until his sentencing on February 23, 2024.
