Binance, the world’s largest cryptocurrency exchange, has taken a significant step to maintain its foothold in the European market by restructuring the ownership of its French subsidiary.
In response to regulatory pressure and the legal troubles of its co-founder, Changpeng Zhao, also known as CZ, Binance France has appointed two new shareholders to own equal stakes in the company.
TLDR
- Binance France has replaced co-founder Changpeng Zhao (CZ) with two new shareholders, Yulong Yan and Lihua He, to comply with French regulations.
- The move comes after CZ pleaded guilty to violating U.S. banking laws last year, making him ineligible to own a majority stake in a French company.
- Yulong Yan, also known as Allan Yan, was a co-founder of Binance, while Lihua He’s background remains unclear.
- This restructuring aligns Binance France with the upcoming Markets in Crypto-Assets (MiCA) regulation, which allows crypto firms to “passport” licenses across the EU.
- Despite its significance in the European market, Binance faces ongoing investigations in France for potential money laundering and advertising violations.
The move comes after the French Financial Markets Authority (AMF) issued a warning to Binance France in December, following CZ’s guilty plea for violating U.S. banking laws last November.
Under French regulations, a company cannot have a majority shareholder with a criminal record, prompting Binance to replace CZ as the sole owner of its French operations.
The new shareholders, Yulong Yan and Lihua He, both co-founding members of Binance, now hold 50% ownership each.
Yulong Yan, also known as Allan Yan, was identified in Binance’s original 2017 whitepaper and previously served as a co-founder and product director at Bijie Tech, a Chinese exchange services company shut down by authorities in 2017.
However, little is known about Lihua He, as Binance has declined to provide further details about his background or whether CZ was compensated for his shares in the French subsidiary.
This ownership restructuring is part of Binance’s broader “global restructuring project” aimed at aligning the company with regulatory standards across various jurisdictions.
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
As the landmark Markets in Crypto-Assets (MiCA) regulation prepares to take effect in the European Union over the next two years, Binance’s move is designed to ensure compliance and maintain its operational legitimacy in France, the EU’s second-largest economy.
MiCA will allow crypto companies to “passport” their licenses from one EU member state to operate across all 27 nations.
With France serving as a strategic hub for Binance’s European operations, securing regulatory approval under the new framework is crucial for the exchange’s long-term prospects in the region.
However, Binance’s path to compliance in France has been complicated by ongoing investigations from French prosecutors into potential money laundering and unauthorized advertising practices.
These probes, coupled with CZ’s criminal conviction, have raised questions about the exchange’s ability to secure a MiCA license when the tougher rules for crypto firms take effect in 2025.
Despite these challenges, Binance has taken significant steps to distance itself from its co-founder’s legal troubles.
Late last year, CZ was succeeded as CEO by Richard Teng, a former Singapore central bank regulator, as part of the company’s efforts to strengthen its regulatory compliance and governance structures.
The ownership transition in France is the latest development in Binance’s efforts to navigate the evolving regulatory landscape and maintain its position as a major player in the European crypto market.
By appointing new shareholders with ties to the company’s founding team, Binance aims to demonstrate its commitment to adhering to local regulations while preserving its operational capabilities in a key market.
