In a surprising move, Changpeng Zhao, the founder and CEO of Binance, has announced that he is stepping down from his role as the board chairman of Binance.US, the US-based affiliate of the global cryptocurrency exchange. Zhao, who is also known as CZ, made the announcement on Twitter on November 21, 2023, saying that he is handing over the reins to Richard Teng, was CEO of the Financial Services Regulatory Authority at Abu Dhabi Global Market (ADGM).
CZ said that he is stepping down to focus on his role as the leader of the global Binance platform, which has been facing increased regulatory scrutiny and pressure from various jurisdictions around the world. He also said that he is confident in Brooks’ ability to steer Binance.US to success, as he has extensive experience and expertise in both the traditional financial sector and the crypto industry. CZ added that he will remain as an advisor and a shareholder of Binance.US, and that he will continue to support its growth and innovation.
The news of CZ’s departure comes amid a turbulent period for Binance, which has been accused of operating illegally or without proper licenses in several countries, including the UK, Japan, Germany, Singapore, and Canada. The exchange has also faced investigations from regulators in the US, such as the Commodity Futures Trading Commission (CFTC) and the Department of Justice (DOJ), over allegations of market manipulation, money laundering, and tax evasion. Binance has denied any wrongdoing and has said that it is committed to complying with local laws and regulations wherever it operates.
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Binance.US, which was launched in September 2019 as a separate entity from Binance, has been trying to distance itself from the regulatory woes of its parent company and to establish itself as a compliant and trustworthy platform for US customers.
The exchange has obtained licenses or registrations in 43 states and territories in the US and has recently applied for a national bank charter from the OCC, which would allow it to offer a wider range of financial services and products to its users. Binance.US has also hired several former regulators and industry veterans to its leadership team, such as Brooks, who joined as CEO in May 2021, and Manuel Alvarez, who joined as chief administrative officer in October 2021.
The reaction from the crypto community to CZ’s announcement has been mixed, with some expressing support and appreciation for his contributions to the industry, and others questioning his motives and credibility. Some analysts have speculated that CZ’s decision may be a strategic move to appease regulators and to avoid potential conflicts of interest or legal liabilities. Others have suggested that CZ may be preparing for a possible initial public offering (IPO) or merger of Binance.US, which could boost its valuation and legitimacy in the eyes of investors and authorities.
Binance.US is a separate entity from Binance, operating under a different management team and board of directors. It is registered as a money services business with the Financial Crimes Enforcement Network (FinCEN) and complies with the US anti-money laundering and know-your-customer regulations. It also has licenses or approvals to operate in 43 states and territories.
An IPO or merger of Binance.US could provide several benefits for CZ and Binance. First, it could raise capital and liquidity for the exchange, which could help it expand its services and market share in the US, one of the most important and competitive markets for crypto.
Second, it could enhance its reputation and credibility among regulators, customers, and partners, as it would have to meet the strict standards and disclosures required by the US Securities and Exchange Commission (SEC) and other agencies. Third, it could create a clear distinction between Binance and Binance.US, which could reduce the legal risks and challenges that Binance faces in other countries.
However, an IPO or merger of Binance.US also entails some challenges and uncertainties. For instance, it is not clear how much control or influence CZ would retain over Binance.US after the deal, as he would have to comply with the corporate governance and fiduciary duties imposed by US law.
Moreover, it is not clear how the deal would affect the relationship between Binance and Binance.US, especially in terms of sharing technology, resources, and customers. Furthermore, it is not clear how the deal would impact the valuation and performance of BNB, the native token of Binance, which is used for various purposes on the platform.
CZ may be preparing for a possible IPO or merger of Binance.US, which could boost its valuation and legitimacy in the eyes of investors and authorities. However, the deal also involves some challenges and uncertainties that need to be addressed before it can materialize. It remains to be seen whether CZ will pursue this option and how it will affect the future of Binance and the crypto industry.