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🏢 Situational awareness: Andreessen Horowitz closed its Miami office space because employees weren't using it enough, Bloomberg reports.

Binance has barred former CEO Changpeng Zhao for life from running the company, but he will still have a powerful say in the company as its majority shareholder.

Why it matters: Binance's November plea agreement with the Department of Justice left plenty of room for interpretation when it said Zhao had been barred from "managing or operating" the company.

Driving the news: CEO Richard Teng confirmed to Axios it was indeed a lifetime ban, offering some more clarity on what Zhao, also known as CZ, is allowed to do when he completes his jail sentence on Sept. 29.

Some original reports of the plea deal, including ours, said he would be barred for three years due to language in a DOJ memo.

What they're saying: "CZ, of course, obviously being the largest shareholder, will retain all shareholder rights," says Teng. 

"As a shareholder, he will be looking at the performance of the company, and if things are not up to what he expects, as an investor, it's always his right to replace, nominate a new board of directors, or a new CEO ... shareholders can also always table a resolution."

Zhao was previously the company's sole board member. Following the plea deal, the company has now seven members on its board.

Zhao is broadly barred from "day-to-day" activities, a spokesperson said.

Between the lines: His majority shareholder powers still leave significant questions as to what is considered "managing or operating." Could he act as a consultant to executives, for example? 

Zhao appears to have maintained friendly ties with company insiders, including co-founder and romantic partner Yi He and Binance executive Tigran Gambaryan, who is currently held in Nigeria. The two were among the employees who penned letters in support of Zhao ahead of his sentencing.

That's where two external monitors, appointed via the plea deal to check for compliance, will probably play a role, says Vanderbilt University law professor Yesha Yadav. The monitors are expected to watch the company for the next three to five years.

"The monitor is going to have a big impact in that sense to act as a check and balance to support the board and will have discretion when it comes to CZ's role as a very important shareholder," she says.

The intrigue: The language of the DOJ's settlement with Binance doesn't appear to have made the ban a requirement of the plea agreement, notes former federal prosecutor and Columbia Law School professor Daniel Richman.

The ban was instead listed as a "consideration" of the agreement in the document.

That suggests that the agreement doesn't entirely shut the legal door on his return as CEO, and it would be harder for the DOJ to legally pursue should he do so. 

"The bottom line is that a provision could indeed be written that would bar Binance from bringing him back, and that would allow the government to claim breach if the firm did so. That provision does not appear in the agreement," Richman says.

But Binance says in a statement he was "prohibited from any present or future involvement in operating or managing the business" under the terms of the agreement. 

The DOJ did not respond to a request for comment.

What next: Following the plea deal, Zhao said he had no intention of being a CEO of any sort going forward and that he will focus on investing in blockchain, AI, and biotech companies.

"That life no longer exists for me," he wrote of leading Binance in an April letter to the court. 

The bottom line: The next few years, while under intense scrutiny from U.S. officials, will probably be pivotal in shaping Binance's relationship with its majority shareholder.

"It's going to be very risky for Zhao to try and start to assert himself," says Yadav. "Notwithstanding the leeway that might be involved in the plea deal, it is a tripwire and gives them reason to look at you and [take it as a sign] you are falling back to behavior from the past."

What CZ's Binance role will be

Photo illustration of Changpeng Zhao surrounded by abstract lines, bars, and circles. 

Photo illustration: Aïda Amer/Axios. Photo: Antonio Masiello/Getty Images

Flex, which provides infrastructure for accepting HSA and FSA payments, raised $3.2 million in seed funding, it tells Axios exclusively.

Why it's the BFD: By accepting payments from tax-advantaged accounts, health and wellness brands can tap into $150 billion in potential HSA and FSA spending.

How it works: Flex enables direct-to-consumer merchants to process HSA and FSA payments alongside traditional card purchases.

It looks at product-level details within a customer's shopping cart and integrates with the SIGIS Eligible Products List to check product eligibility for HSA or FSA payment at checkout.

For dual-purpose products or those that require a letter of medical necessity, it offers an asynchronous telehealth option to qualify purchases directly in the checkout flow.

If a customer has both eligible and non-eligible items, Flex will show a split cart and allow them to enter two forms of payment — their HSA/FSA card and a credit or debit card.

Between the lines: Although big retailers and pharmacy chains like Amazon, CVS and Walgreens have developed similar payment solutions in-house, Flex makes the same payment flow available through their API and Shopify payment app.

"There are estimates that anywhere from $6 billion to $9 billion are unspent out of FSAs every year. Those are benefits people are losing out on," Flex CEO Sam O'Keefe says.

Zoom in: The seed funding came from Y Combinator, SV Angel, Precursor and Liquid 2 Ventures.

Context: O'Keefe founded the San Francisco-based company with Miguel Toledo, with whom she worked in the anti-fraud group of fintech startup Unit 21.

It serves over 100 health and wellness brands today, including KindredBravely, BedJet and Lumen.

⌨️ Fun fact: Ryan worked with Sam at TechCrunch while she was working on events and special projects and he was on the editorial team.

D2C health payments exclusive

Illustration of a cash register with an EKG on the screen

Data: CoinGecko; Note: 2024 data is until August 25, 2024; Chart: Axios Visuals

Binance derives most of its revenue from trading, making volumes  a proxy for its health. 

As the price of cryptocurrencies have recovered, the company is on track to grow in 2024.

Charted: Binance's trading revenue recovers

🏹 Robinhood will allow retail traders in the U.K. to lend out any stocks they own to interested borrowers. (CNBC)

💰 Coinbase hasn't donated to a presidential candidate yet, but it has made targeted donations to various congressional campaigns. (Bloomberg)

🏧 The amount of money consumers lost to scams involving bitcoin ATMs increased tenfold from 2020 to 2023. (PYMNTS)

🪙 CEO Brad Garlinghouse said Ripple will launch its new stablecoin in the coming weeks. (The Block)

Credit score

Illustration of an exam answer sheet with the words "credit score" hand written in red ink.

Go deeper into our full database with the Axios Pro Deals Tracker.

• Unlock Technologies, a Tempe, Ariz.-based home equity agreement provider, raised a $30m Series B equity round from D2 Asset Management,  Saluda Grade, Second Century Ventures and Reach. It also secured a $250m capital commitment from D2. Go deeper

• Fido, a Ghanaian digital lender, raised a $20m Series B from BlueOrchard and FMO. It also secured $10m in debt. Go deeper

• Sedric AI, a New York AI platform for financial institutions, raised an $18.5m Series A round led by Foundation Capital with participation from Amex Ventures. www.sedric.ai

• Malaa, a Saudi Arabia-based wealth management platform, raised a $17.3m Series A led by SNB Capital. Go deeper

• Ume, a Sao Paulo-based payments startup, raised a $15m Series A led by PayPal Ventures, with participation from NFX, Globo Ventures and Clocktower Ventures. Go deeper

• Palm, a Sweden and Netherlands-based enterprise cash management startup, raised a $6.1m seed led by Speedinvest and Target Global. Go deeper

• Ida, a Hong Kong-based digital asset company, raised a $6m seed led by CMCC Global and Hashed. Go deeper

• Steerlab, a Paris-based sales workflow automation startup, raised €1.7m in pre-seed funding led by Dreamcraft VC, with participation from Heartfelt and Lumière AI Ventures. Go deeper

• Mercer Advisors, an RIA majority owned by Oak Hill Capital and Genstar Capital, acquired Benchmark Wealth Management, an Old Lyme, Conn., firm with $412m in AUM. Go deeper

• Axway (PAR: AXW) completed its acquisition of Sopra Banking Software from Sopra Steria for €330m. Go deeper.

• Tarabut, a Middle Eastern open banking firm, acquired U.K. fintech real-time account-to-account payments platform Vyne. Go deeper

• Bregal Sagemount raised nearly $800m for a credit solutions fund. sagemount.com

• Halo Capital, a new crypto venture firm from former 10T principals Daniel Howard and Bhavin Vaid, raised $25m. www.halo.xyz

Deals!

• Anthony Watson, founder and CEO of The Bank of London, is stepping down and transitioning to senior adviser at the firm. Go deeper

• Cactus Raazi, former U.S. CEO and co-head Americas as Amber Group, was named CEO of B2C2's U.S. business. Go deeper

• Shelley Magee has been named CEO of ActiveViam. She was previously COO of Regnology. www.activeviam.com

• Alex Gersh, CFO of Paysafe Limited, will transition to a special advisory role to CEO Bruce Lowthers. Go deeper

• Daniel Strömberg, formerly at Freska, joined Zimpler as COO. Go deeper

• Keren Sharir, CMO of payments and loyalty platform Nayax, has been named president in addition to her current role. Go deeper

• Matter Labs, the company behind ethereum-scaling network ZKsync, laid off over 16% of staff. Go deeper

• Binance hired Grant Thorton Singapore to provide accounting and tax advisory services. Go deeper.

It's Personnel

📺 @Lucinda is trying out "The Paradise."

️💣 @Ryan is in awe of Kyle Schwarber.

Thanks to George Moriarty and Rob Reinalda for today's edits.

And thanks to you for reading this edition of Fintech Deals. Please tell your fintech friends and PBS supporters about this newsletter. They can sign up here.

September 04, 2024

1 big thing: What CZ's Binance role will be