Changpeng Zhao leaves Binance.US as SEC ramps up scrutiny
Changpeng ‘CZ’ Zhao has resigned from his position as chairman of the board for Binance.US, distancing himself from the governance of the American division of the cryptocurrency exchange.
The move follows Zhao’s guilty plea in a Seattle court to charges related to the Bank Secrecy Act, along with his agreement to pay a $50 million fine and his resignation as CEO of Binance.
Through a proxy agreement, Zhao has transferred his voting rights, which changes his role in Binance.US to one of purely economic interest without governance influence. This comes as a judge ordered Zhao to remain in the U.S. while awaiting sentencing scheduled for February, pending further review.
Despite the legal developments of its parent exchange, Binance.US stated that it is not involved in the recent settlements and currently has no outstanding enforcement issues with the Department of Justice, the Financial Crimes Enforcement Network, the Office of Foreign Assets Control, or the Commodity Futures Trading Commission. The company asserts that it remains operational and dedicated to providing its customary services to customers.
As you know, https://t.co/AZwoBOgsqS was launched with the express purpose of serving United States customers in accordance with all…
— Binance.US 🇺🇸 (@BinanceUS) November 28, 2023
The SEC continues to investigate Binance.US with a focus on uncovering any potential mechanisms within the exchange that might allow for the control of customer assets akin to the allegations faced by FTX. In June, the SEC filed a lawsuit against both Binance and Binance.US, accusing them of the sale of unregistered securities and a series of legal violations including fraud and conflicts of interest.
One of the key accusations was the alleged discretionary diversion of customer assets, with claims of funds being sent to Sigma Chain, a company under Zhao’s control, in Switzerland. Binance.US’s attorneys contended in court that there is no evidence of asset misuse and requested the court to halt the SEC’s investigation into potential fraud. Top of Form
Binance.US stated that it considers the lawsuit filed against it to be baseless, and as a result, the exchange is prepared to defend itself in court and challenge all of the unfounded allegations. Binance.US asserts that, based on the available facts, the applicable law, and previous actions by the SEC, the regulator’s complaint lacks justification.
Meanwhile, Binance.US has been experiencing leadership changes, including the recent departure of CEO Brian Shroder and a reduction in its workforce by more than 100 positions, representing about a third of its employees. Norman Reed, Chief Legal Officer, is temporarily taking his place.