Binance boss says he will withdraw US investments for now

Binance CEO Changpeng Zhao said the company intends to withdraw potential investments in the US as US regulators escalate their crackdown on crypto companies.

Zhao, the co-founder of the sprawling crypto group, said in a tweet on Friday that Binance had “withdrawn some potential investments or offers for bankrupt companies in the US for the time being.”

The announcement comes as the Securities and Exchange Commission launched a series of enforcement actions targeting large companies in the digital asset space, including exchanges Gemini and Kraken. New York regulators also recently halted the issuance of BUSD — a dollar-pegged token that sports Binance branding and is the third-largest of its kind in the crypto market.

“There are definitely more regulatory controls. . . and a tightening of the industry as a whole,” Zhao said during a Twitter Spaces session earlier this week. He added that it’s likely that banks have been asked by regulators to “either not fully partner with crypto companies or be very cautious about partnering with crypto companies.”

Binance — which remains by far the world’s largest crypto exchange — has long insisted its US operations are independent of Binance Holdings, a Cayman Islands company that acts as the holding company for the offshore trading platform, which is subject to regulatory scrutiny has been subjected to regulators in the UK, Singapore, the Netherlands and elsewhere.

However, there are connections between the two. Zhao is the ultimate beneficial owner of the exchange’s US wing. Both Binance US and Binance Holdings have used the same lobbyists to attack lawmakers in Washington.

Binance US has tried to convince regulators to approve a $1 billion purchase of bankrupt crypto lender Voyager Digital’s assets. A Binance US spokesman insisted that the Voyager deal was not abandoned: “We would like to clarify that Binance.com was not involved in the bidding process and the Binance US-Voyager deal is moving forward with all necessary verification processes. ”

Binance US has “no plans to exit the US market,” the spokesperson added.

The deal is under review by the US Committee on Foreign Investments (Cfius), a body that reviews certain US foreign investment transactions for potential security risks.

“Cfius is a very big deal. . . it doesn’t make sense unless there are genuine national security concerns,” said a Washington lobbyist.

Earlier this month, Binance announced the suspension of US dollar remittances without explaining the decision. The announcement came after one of its banking partners, Signature Bank, said it would no longer allow crypto exchange customers to buy or sell amounts less than $100,000.

The exchange said just 0.01 percent of its monthly active users used the US dollar for payments, although legal experts said that’s not enough to put it out of reach of US regulators.

“If a company uses or transacts in the US dollar, even minimally, it could increase the likelihood that it will interact with the US financial system and then potentially draw the wrath of regulators,” said Joanna Wasick, a partner at of the US law firm BakerHostetler.