These American States Have Asked Binance.US to Cease Services: WSJ

Read Time:2 Minute, 8 Second

Following the guilty plea of Changpeng Zhao (CZ), founder and former CEO of crypto exchange Binance, in November 2023, several American states have asked the local arm of the trading platform to refrain from servicing their residents.

The Wall Street Journal reported that authorities in Florida and Alaska recently instructed Binance.US to cease its services in the regions.

Florida and Alaska Restrain Binance.US

Recall that the Department of Justice (DOJ) announced a $4.3 billion settlement with Binance late last year, but the exchange refrained from pleading guilty to willfully floundering the Bank Secrecy Act, among other charges. At the same time, CZ pleaded guilty to failing to implement a strong anti-money laundering (AML) program on the platform, accepting to pay a $50 million fine and resign from the CEO position.

Besides stepping down as Binance’s CEO, CZ also exited his role as chairman of Binance.US’ board of directors and transferred his voting rights to Norman Reed, the firm’s chief executive. Following the changes, CZ’s interest in the exchange’s American arm became purely economic as the company became independent of its global business.

Despite all said and done, regulators in Florida and Alaska said CZ’s guilty plea has made him unsuitable to control Binance.US as he still holds approximately 80% of the firm’s shares.

Within a week after the guilty pleas, the Florida Office of Financial Regulation issued an emergency suspension order against Binance.US’ money services business license, stating that the continued operation of the platform constituted “an immediate serious danger to the public health, safety, and welfare.”

CZ to Be Sentenced Next Month

Furthermore, the Alaska Division of Banking and Securities denied the renewal of Binance.US’ money transmitter license earlier this month because the exchange’s ownership structure did not meet the requirements for renewal.

It is worth mentioning that regulators in Arkansas, Illinois, and South Dakota reached an agreement with Binance.US in December concerning the firm’s continued operation in the states. The settlement requires the exchange 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.

Meanwhile, CZ has been confined to the U.S. until his sentencing next month despite being released on a $175 million personal recognizance bond after his guilty plea and offering his $4.5 billion equity in Binance as collateral.

The post These American States Have Asked Binance.US to Cease Services: WSJ appeared first on CryptoPotato.

Leave a Reply

Your email address will not be published. Required fields are marked *