The investigation and sentencing of Changpeng Zhao (CZ), the founder and CEO of Binance, for money laundering charges in the United States, was a significant event in the crypto industry. In April 2024, Zhao pleaded guilty to the charges and was sentenced to four months in prison. However, this is not the only legal issue that Binance has faced in recent times.
The French branch of cryptocurrency exchange giant Binance, Binance France, has completely removed the shares held by its founder, Changpeng Zhao, from the company.
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Under French regulations, it’s prohibited for a company’s dominant shareholder to have a criminal background. Therefore, Binance France’s move aims to maintain the crypto exchange’s eligibility to continue its operations in the EU’s second-largest economy.
According to Papers’ information, Yulong Yan and Lihang He are reportedly the new co-owners of Binance France, holding equal shares, approximately 50% each. It is also claimed that Lihang He previously held a significant role within Binance as the Chief Product Officer.
🔴 @cz_binance n’est plus l’actionnaire de Binance France
Il était indispensable qu’il ne soit plus l’actionnaire principal depuis sa condamnation aux US afin que Binance conserve son enregistrement AMF
— Grégory Raymond 🐳 (@gregory_raymond) May 28, 2024
Yulong Yan helped establish Bijie Tech, a business founded by Zhao prior to Binance, which specialized in supplying software solutions for crypto trading platforms. This venture ceased operations in the year 2017.
The representatives from Binance declined to disclose details regarding their ownership stake in Binance France. According to a statement released by the company, Binance’s French subsidiary is undergoing shifts in its share and organizational framework as part of a worldwide restructuring initiative, which is being carried out in compliance with local financial regulations and requirements. This move came after receiving an official notice from the Autorité des Marchés Financiers (AMF) to Binance France.
The latest shareholders of Binance France are original members of the Binance team, neither of whom have been implicated in past controversies. Each owns a 50% stake in Binance France. This development won’t influence the routine functions of Binance France and will remain unchanged for users.
Binance announcement
In December 2023, I notified the company’s management that Zhao could no longer maintain ownership due to the legal proceedings against him by the U.S. Department of Justice and the Commodity Futures Trading Commission.
Binance under the gun of French regulators
In June 2022, Le Monde announced that the French division of Binance was currently under preliminary investigation, initiated as early as February 2022, due to suspicions of offering unlawful crypto services and neglecting Anti-Money Laundering (AML) requirements.
The platform is under investigation for conducting digital asset business without registration, and the prosecutor has identified instances of severe money laundering.
During that period, the Binance branch manager, David Prinçay, stated that on-site examinations by regulators are a mandatory requirement for all financial institutions within the country. He asserted that the company adheres to local laws and collaborates with regulatory bodies.
In France, on-site inspections conducted by regulatory bodies and inspectors are mandatory requirements that all financial institutions must adhere to. Last week, we were visited by the relevant authorities. For instance, Binance,…
— David Prinçay (@davidprincay) June 16, 2023
Zhao, formerly leading Binance, reacted via tweet with the numeral “4,” signifying disregard for FUD and misinformation. In France, unannounced inspections of regulated entities, including cryptocurrencies, are customary for banks, now extending to their practices.
Zhao’s investigation and sentencing
On April 30th, Zhao admitted to money laundering offenses and received a sentence of four months’ imprisonment.
U.S. District Judge Richard Jones handed down a lighter-than-expected sentence for Zhao, falling short of the three years in prison that prosecutors had recommended. Prior to making his ruling, Jones criticized Zhao for putting Binance’s expansion and financial success above adhering to American legal regulations.
At first, the U.S. Attorney’s Office alleged that Binance failed to disclose approximately 100,000 questionable transactions linked to organizations such as Hamas, Al Qaeda, and ISIS. Additionally, prosecutors asserted that the exchange facilitated the trading of child sexual abuse content and received a substantial portion of ransom payments.
As a crypto investor, I’ve come across some troubling news. In June 2023, Binance and its CEO Changpeng Zhao were accused by U.S. authorities of running an unregistered exchange and deceiving investors. The allegations claimed that Zhao utilized his Swiss fund, Sigma Chain, to artificially boost trading volumes on the Binance platform.
Last November, the US Department of Justice imposed a penalty exceeding $4 billion on Binance for breaching U.S. regulations regarding bank secrecy and international emergency economic powers, as well as for failing to register as a money transmitter. In light of these accusations, Zhao Changpeng, Binance’s CEO, announced his departure from the position.
Binance international failures
In the year 2023, Binance faced only the initial stages of dealing with regulatory bodies from different nations. Over the recent period, numerous regulatory bodies and governments have brought charges against the cryptocurrency exchange.
Nigeria
As a analyst, I would rephrase it as follows: In March, I was requested by Nigerian authorities to provide details about the top 100 users on Binance and their complete transaction records over the previous six months. This request came following the arrests of two key Binance executives – Tigran Gambaryan, head of investigations, and Nadeem Anjarwalla, regional manager for Africa.
Later, the Nigerian authorities brought criminal charges against Binance for allegedly evading taxes on four separate occasions.
Philippines
In November 2023, I found out that the Securities and Exchange Commission (SEC) of the Philippines started imposing limitations on my ability to use Binance.
As a researcher, I’ve come across information stating that Binance is yet to be registered as a company in the Philippines and lacks the necessary permits and licenses for its operation from the Securities and Exchange Commission (SEC). The SEC has announced plans to impose restrictions on accessing the trading platform which they estimate will take approximately three months to implement. This period is intended to provide users with sufficient time to withdraw their funds from Binance before these restrictions go into effect.
Russia
In September 2023, Binance exited the Russian market and transferred its operations to CommEX. Subsequently, users started moving to the newly acquired platform.
At the end of March, CommEX made an announcement that they would be halting their operations. They explained this decision by sharing that they had conducted a comprehensive evaluation of their current circumstances and were reconsidering their future strategies.
Will Binance France’s decision affect Zhao?
As a researcher studying the crypto industry, I’ve observed that Zhao has managed to retain his position as the wealthiest individual in this sector for an extended period, despite facing challenges from regulators and serving a prison sentence.
Experts at Forbes previously reported that Binance is the globe’s leading cryptocurrency exchange in terms of trading volume, bringing in approximately $9 billion in earnings last year. The net worth of its CEO, Zhao, was approximated to be around $33 billion as of early April by journalists.
Zhao’s wealth primarily comes from his holdings in Binance’s shares. Contrary to rumors, he no longer possesses ownership of Binance France. However, Zhao retains control over shares in Binance’s international division. As a result, the recent decision made by Binance France is not expected to have a substantial impact on Zhao’s vast cryptocurrency fortune.
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2024-05-30 19:25