Overview
Binance France, the French subsidiary of the world’s largest cryptocurrency exchange, has removed founder Changpeng Zhao (CZ) as its sole shareholder. This action is part of a broader compliance effort to adhere to local regulations and ensure the exchange can continue operating in France.
Key Points
- Reason for Removal: French regulations stipulate that a company’s majority shareholder cannot have a criminal record. This decision comes after charges against Zhao by U.S. authorities, which would disqualify him under French law.
- New Shareholders: Co-founders Yulong Yan and Lihua He now each own 50% of Binance France. Both have significant histories with Binance and related companies.
- Company Statement: Binance has stated that the restructuring of its French division is part of a global compliance effort following notifications from the French Financial Markets Authority (AMF).
Regulatory and Legal Challenges
- AMF Notification: In December 2023, the AMF notified Binance France that Zhao could no longer own shares due to charges against him.
- Investigations: Binance France has been under investigation since February 2022 for allegedly providing illegal crypto services and failing to meet anti-money laundering (AML) requirements. This includes activities related to unregistered digital asset service provision and aggravated money laundering.
- Charges Against Zhao: Zhao pleaded guilty to money laundering charges and received a four-month prison sentence in April 2023. U.S. authorities accused him and Binance of various serious violations, including supporting terrorist organizations and inflating trading volumes.
Global Regulatory Issues
- Nigeria: Nigerian authorities arrested Binance executives and filed charges for tax evasion. They also requested transaction histories of top users.
- Philippines: The SEC restricted Binance’s operations due to lack of proper registration and licensing.
- Russia: Binance exited the Russian market, selling its business to CommEX, which later suspended operations.
Impact on Zhao
Despite these challenges, Zhao remains one of the wealthiest individuals in the crypto industry. His primary wealth source is his shares in Binance’s global operations. While he no longer holds shares in Binance France, this move is unlikely to significantly impact his overall fortune. Binance continues to lead the industry with substantial revenue, maintaining Zhao’s position as a prominent figure in the cryptocurrency world.
Conclusion
Binance France’s decision to remove Changpeng Zhao as a shareholder is a strategic compliance move to adhere to local regulations. Although it addresses immediate regulatory concerns in France, it does not substantially affect Zhao’s overall wealth or his standing in the global crypto market. Binance’s ongoing regulatory and legal challenges across multiple countries underscore the complexities and risks associated with operating a global cryptocurrency exchange.
