In the aftermath of Changpeng Zhao’s (CZ) guilty plea in November 2023, founder and former CEO of Binance, several American states are taking measures against Binance.US. Recent reports from The Wall Street Journal reveal that authorities in Florida and Alaska have instructed the local arm of the trading platform to stop servicing their residents.
Florida and Alaska Bans Binance.US
Florida and Alaska regulators have demanded that Binance.US cease its services within their regions. This comes after CZ’s guilty plea to failing to implement a robust anti-money laundering (AML) program on the platform. The Department of Justice (DOJ) settled with Binance for $4.3 billion, but the exchange did not plead guilty to willfully violating the Bank Secrecy Act, among other charges.
CZ’s Exit and Ownership Changes
CZ not only stepped down as Binance’s CEO but also resigned from his role as chairman of Binance.US’ board of directors. His voting rights were transferred to Norman Reed, the firm’s chief executive. Despite these changes, regulators in Florida and Alaska argue that CZ’s substantial ownership stake of approximately 80% in Binance.US makes him unsuitable to control the platform.
Within a week of the guilty pleas, the Florida Office of Financial Regulation issued an emergency suspension order against Binance.US’ money services business license. The order stated that the platform’s continued operation posed an immediate serious danger to public health, safety, and welfare. Additionally, the Alaska Division of Banking and Securities denied the renewal of Binance.US’ money transmitter license, citing non-compliance with ownership structure requirements.
Binance.US in Settlement with Other States
While facing challenges in Florida and Alaska, Binance.US reached settlements with regulators in Arkansas, Illinois, and South Dakota in December. The terms require the exchange to secure a depository account at a federally insured banking institution and make CZ’s voting rights transfer irrevocable by June 30, 2024.
Despite being released on a $175 million personal recognizance bond, CZ is confined to the U.S. until his sentencing next month. He offered his $4.5 billion equity in Binance as collateral. The aftermath of CZ’s guilty plea continues to unfold, impacting Binance.US operations in various U.S. states.