Changpeng Zhao, Binance CEO. REUTERS/Darrin Zammit Lupi
Binance.US is Binance's regulation-friendly, nominally independent business unit.
According to the New York Times, questions regarding its independence hampered a pre-IPO fundraising round.
According to a spokesperson for Binance, a new fundraising round for Binance.US would be held soon. The Times also learned that IPO plans remain on track.
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According to a New York Times report, Binance's negotiations with venture capitalists for at least $100 million collapsed this year due to fears that Changpeng Zhao, the CEO of Binance, owned too much of its US division.
Binance.US was initially established to placate wary American regulators. It has since become Binance's most important business unit, serving as the exchange’s regulation-friendly, nominally independent arm. Binance.US grew rapidly and Binance hired several prominent former regulators including Brian Brooks, the former Comptroller for the Currency.
How independent is Binance.US? According to the Times, this question was a problem in a recent round of fundraising that involved venture capitalists such as GreatPoint Ventures.
Brooks reportedly pitched GreatPoint in a $100 million round of fundraising, which was meant to be a prelude for a Binance.US IPO. Prospective investors were assured by Brooks that Binance's US subsidiary was separate from the rest of Binance and would comply fully with American regulations. This meant that the US division had to adhere to strict anti-money laundering regulations and know-your customer protections.
Ray Lane, GreatPoint's managing partner, said that GreatPoint was scared away by two factors. The first was a DOJ/IRS investigation into possible tax evasion and money laundering. Second, Zhao owned around 90% of Binance.US.
"How could we ever feel secure that the company was independent and using the same technology?" Lane spoke to the Times.
Brooks quit Binance.US in august, citing "differences regarding strategic direction."
According to a spokesperson for Binance, a new fundraising round for Binance.US would be held soon. The Times also learned that IPO plans remain on track.
