According to a report of DLNews, Binance France has replaced co-founder and former Binance Group CEO Changpeng Zhao (CZ) with two new shareholders, a strategic move aimed at preserving its operational status in the EU’s second-largest economy. This decision follows CZ‘s guilty plea to violating US banking laws last November. He was sentenced to 4 months in prison for his violations and had to pay around $150 million to U.S. authorities, including regulator CFTC.
To comply with French regulations, which disallow a criminal from being a majority shareholder, Binance France has redistributed its shares. CZ, who owned 100% of Binance France, has been replaced by co-founding team members Yulong Yan and Lihua He, each holding 50% of the shares.
New Shareholders at the Helm
Yulong Yan, also known as Allan Yan, is recognized as a team member in the original Binance whitepaper. Yan previously co-founded Bijie Tech, a Chinese exchange services company that shut down in 2017 due to regulatory changes. Lihua He, not mentioned in the original whitepaper, remains relatively unknown, with Binance declining to provide additional details about this shareholder.
This change is part of Binance‘s broader strategy to comply with regulatory requirements and maintain its operations within the EU, especially with the upcoming Markets in Crypto-Assets (MiCA) regulation. MiCA will allow companies to “passport” their license from one EU country to all 27 member states, fostering greater investment in digital assets across the continent.
Learn more about the strategic importance of compliance for FinTechs.
Compliance and Legal Challenges
Binance‘s decision to restructure its ownership in France is also a response to legal and regulatory pressures. The French Financial Markets Authority (AMF) had issued a notice to Binance France to adjust its operations following CZ’s conviction. The exchange faces investigations in France for potential money laundering and unauthorized advertising.
This strategic compliance move is crucial as Binance aims to secure a license under MiCA, which is set to impose stricter rules for exchanges by 2025. Given its recent legal challenges, legal experts remain uncertain whether Binance will obtain approval under the new regulatory framework.
Lessons from the Binance Settlement
Binance‘s situation echoes its broader compliance struggles, exemplified by the $4.3 billion settlement with U.S. authorities. This settlement included a hefty fine, the appointment of independent compliance monitors, and the implementation of a robust anti-money laundering (AML) and Know-Your-Customer (KYC) program. Such measures highlight the critical importance of compliance in maintaining operational integrity and avoiding severe penalties.
Binance has further problems in Nigeria. Two high-ranking Binance executives, Tigran Gambaryan, a compliance officer, and Nadeem Anjarwalla, who is responsible for Binance Nigeria, have been charged with money laundering and tax offenses.
Years of neglect of compliance under CEO CZ may have made Binance the market leader, but it is currently hampering the further development of the crypto giant and poses a threat to the executives, as the case of Binance Nigeria demonstrates.
