Regulatory Pressure Mounts as Binance.US Faces Restrictions in Alaska and Florida

Ryan Asher -

Regulatory Crackdown

Troubled cryptocurrency exchange Binance.US is feeling the heat from U.S. regulators, as both Alaska and Florida have taken measures to restrict its operations following the guilty plea of its former CEO, Changpeng Zhao.

State-Level Actions

Regulatory authorities in Florida and Alaska have issued orders effectively barring Binance.US from offering its services to residents in their respective states. These actions come as a response to concerns surrounding the exchange's compliance with financial regulations.

Denial of License Renewal

The Alaska Division of Banking and Securities has denied the renewal of Binance.US's license, a decision that took effect in January 2024. Despite efforts to seek clarification, Cointelegraph's request for a comment from the regulatory agency remained unanswered.

Emergency Suspension in Florida

Florida's Office of Financial Regulation has taken more immediate action by issuing an emergency suspension order against Binance.US's money transmitter license. This move followed closely after Binance's former CEO, Changpeng Zhao, pleaded guilty to violating U.S. Anti-Money-Laundering policies on November 21, 2023.

Fallout from Guilty Plea

In December, a U.S. federal court formally accepted Changpeng Zhao's guilty plea on one count of Bank Secrecy Act violations. As part of the settlement, Zhao stepped down as the chair of Binance.US and transferred his voting rights through a proxy agreement, effectively removing his influence over the company's governance.

Local vs. Global

Despite the regulatory actions against the global Binance exchange by the U.S. government, Binance.US has maintained its operations within the country. The exchange expressed its commitment to serving its customers with the same products and services throughout this period of regulatory scrutiny.

State-Level Agreements

Towards the end of December, Binance.US reportedly reached agreements with regulators in Arkansas, Illinois, and South Dakota, allowing it to continue operating in those states. A key condition was the irreversible transfer of Changpeng Zhao's voting rights.

Following his guilty plea, Changpeng Zhao has sought to pledge his $4.5 billion stake in Binance.US as security to travel to his home in the United Arab Emirates. However, Judge Richard Jones denied this request during a private hearing on December 29. Zhao is now awaiting sentencing on February 23, 2024, facing a potential 18-month prison term.