Binance and CEO CZ are facing intense scrutiny in the euro area due to banking troubles surrounding the crypto exchange.
Binance, the world’s largest crypto exchange, and its CEO Changpeng “CZ” Zhao are facing rigorous scrutiny from euro area regulators following lawsuits by the US SEC and CFTC against Binance, as reported by the Wall Street Journal. In response, Binance has withdrawn its services from multiple EU countries, with Germany being the latest exit after the financial regulator advised the exchange to withdraw its license application.
Challenges for Binance in Europe: Regulatory and Banking Partnerships
Germany’s financial regulator BaFin advised Binance to withdraw its license application in the country, citing concerns about CEO CZ and the crypto exchange’s complex structure, according to the Wall Street Journal on July 29.
According to sources familiar with the matter, Binance CEO CZ is said to have failed a “fit and proper” test. Additionally, the crypto exchange’s organizational structure has made regulatory oversight challenging, leading to difficulties for regulators.
Binance has withdrawn its license applications in several European countries, including the Netherlands, Austria, Germany, and Cyprus. It is currently under scrutiny from regulators in France, Belgium, and the UK, and it lost its European banking partner, PaySafe.
After losing support for USD and AUD, some speculate that Binance is facing exclusion from the European banking system. These challenges have led to increasing pressure on Binance CEO CZ, especially with the renewed scrutiny in the euro area. Notably, top executives have also departed from various Binance subsidiaries worldwide.
A Binance spokesperson stated that the company proactively withdrew its application for multiple reasons, including efforts to obtain a new crypto license from the European Union. The spokesperson emphasized Binance’s commitment to cooperating with regulatory authorities and seeking the necessary approvals to continue its operations in Germany.
Binance Faces Lawsuits and US Investigation
The US Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) have both filed lawsuits against Binance and CEO CZ. In response, Binance filed a motion seeking to dismiss the CFTC lawsuit, claiming that the regulator lacks jurisdiction over the global entity, and the allegations are unclear.
Regarding the SEC’s involvement, Binance and the SEC have decided to separate the wallets, hardware, and management of Binance and Binance.US. They argue that the exchange has not violated any securities laws.
Binance is also facing investigations by the US Department of Justice (DOJ), and experts believe that a lawsuit against the crypto exchange and its CEO is likely to happen soon.
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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