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Binance founder attempted to shutter or offload U.S. exchange

Ryan Lawler
Illustration of a sad face on a digital, pixelated coin

Illustration: Annelise Capossela/Axios

Binance founder Changpeng "CZ" Zhao tried to shutter or sell the global exchange's U.S. affiliate earlier this year, The Information reports.

Why it matters: Once considered a potential acquirer of other crypto exchanges, news of the attempted offload shows that Binance.US is itself a takeover target.

Driving the news: The Binance.US board of directors, led by Zhao as chair, reportedly voted on closing the U.S. exchange but failed to get the unanimous votes needed to do so.

  • The lone holdout was Binance.US CEO Brian Shroder, according to the report.
  • When that failed, Zhao attempted to sell the exchange, speaking with execs at Gemini and some sovereign wealth funds in an effort to do so.

Of note: The exchange's founder had also sought to reduce his majority stake in the U.S. firm, according to an earlier report.

Context: The news of Zhao's efforts to shut down or unload the exchange comes amid a regulatory crackdown on Binance in the U.S.

  • In June, the SEC sued Binance, Binance.US and Zhao, alleging market manipulation, securities law violations and fraud.
  • The agency also asked a federal court for a temporary restraining order to freeze the assets of the U.S. exchange.
  • That lawsuit follows a separate civil enforcement action from the CFTC, which charged Binance and Zhao with "willful evasion of federal law and operating an illegal digital asset derivatives exchange."

Zoom out: Binance has also struggled abroad, withdrawing its application to register with Germany's financial regulator BaFin last month.

  • The firm recently exited several other European jurisdictions, including Belgium, the Netherlands and Cyprus.

Flashback: This is a quick reversal of fortune for Binance and its U.S. affiliate, which were once considered potential buyers of struggling or bankrupt competitors.

  • Late last year, Binance signed a letter of intent to acquire FTX following that exchange's collapse but walked away from the deal a day later.
  • Soon after, Binance.US emerged as a bidder for bankrupt crypto lender Voyager Digital.
  • It ultimately terminated that deal as well, citing a "hostile and uncertain regulatory climate in the United States."
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