Binance France has replaced co-founder Changpeng Zhao with two new shareholders to maintain its operational status in France and comply with local regulations in the European Union’s second-largest economy.
This unexpected move follows Zhao’s legal issues. It is part of a broader effort to align with European Union standards as new regulatory frameworks like the Markets in Crypto-Assets (MiCA) regulation take effect.
Change of Ownership in Shareholders of Binance France
BINANCE FRANCE DUMPS CZ AMID HOPES IT WON’T BE SHUT DOWN IN EUROPE
– @Binance France has replaced its founder @CZ_Binance with two new company shareholders, owing to European regulatory pressure.
– French regulations enforce that a company’s majority shareholder cannot be a… https://t.co/OVN15EIdqt pic.twitter.com/FJ7jrXFZzB
— BSCN (@BSCNews) May 28, 2024
Changpeng Zhao, also known as CZ, previously owned 100% of Binance France. However, following his guilty plea for violating US banking laws last November, Binance needed to restructure its ownership to comply with French regulations and safeguard its operational status in the EU.
Under these regulations, a company’s majority shareholder cannot have a criminal record. Binance has introduced Yulong Yan and Lihua He as the new majority shareholders of Binance France, each holding 50% of the shares. Both are co-founding team members of Binance.
Yulong Yan, also known as Allan Yan, was identified in the original Binance whitepaper and was a co-founder and product director of Bijie Tech, a Chinese exchange services company that was shut down by the Chinese government in 2017.
Although Lihua He was not mentioned in the 2017 Binance whitepaper, he remains an enigmatic figure with little publicly available information. A Binance spokesperson declined to provide further details about Lihua He or whether Zhao was compensated for his shares.
This shareholder transition is part of Binance’s broader “global restructuring project” to align with regulatory standards across different jurisdictions. The restructuring is crucial for maintaining Binance’s operational legitimacy in France and, by extension, within the EU as new regulatory frameworks like the Markets in Crypto-Assets (MiCA) regulation emerge. The MiCA regulation, which will be fully implemented over the next two years, allows crypto companies to “passport” their license from one EU country to operate across all 27 member nations.
France has been a strategic hub for Binance in Europe, with significant investments and high-profile events in Paris.However, Zhao’s criminal conviction and ongoing investigations into Binance for potential money laundering and unauthorized advertising created uncertainty over Binance’s ability to secure a MiCA license.
Additionally, Binance faces two investigations from French prosecutors about potential money laundering and premature advertising practices.
Binance Amid Regulatory Scrutiny
Binance, also the largest shareholder of South Korean cryptocurrency exchange Gopax, recently sold the asset claims of Gopax victims at less than half their face value on May 27, leading to substantial financial losses for investors. This sale contradicted Binance’s earlier promise to fully compensate victims of the ‘GoFi’ virtual asset deposit service, which had suspended fund withdrawals and owed around KRW 70 billion ($52 million).
Instead of using its funds to cover these losses, Binance sold the claims at a discount amid rising cryptocurrency prices, increasing GoFi’s debt to an estimated KRW 100 billion ($75 million). Investor discontent has grown, especially since Genesis, the service associated with Gopax, had its bankruptcy compensation plan approved, committing to return 77% of bond funds to creditors.
Despite regulatory scrutiny, Cristiano Ronaldo, the well-known Portuguese footballer, recently announced his collaboration with Binance to launch his fourth NFT collection. The collection will be unveiled on May 29 on the Binance NFT Marketplace.
From: cryptonews
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