20 Aug 2021
$ 100 Million Venture Capital Round Collapsed For Binance Over Fears CEO Owns Too Much Of Its Independent US Branch, Report Says | Currency News | Financial and business news
- Binance.US has become a crucial business unit for Binance, functioning as the nominally independent and regulatory abiding arm of the exchange.
- But questions about its independence plagued a recent fundraiser before the IPO, according to the New York Times.
- A Binance spokesperson told The Times that another round of fundraising for Binance.US is slated for soon and that IPO plans are still on track.
- See more stories on the Insider business page.
Binance’s talks with venture capitalists to raise at least $ 100 million collapsed this year after fears CEO Changpeng Zhao might own too much of the U.S. crypto exchange division, New York report says Times.
Initially created to appease suspicious US regulators, Binance.US has become a crucial business unit for Binance, functioning as the nominally independent and pro-regulatory arm of the exchange. As Binance.US grew, Binance hired several former senior regulators, including installing former currency controller Brian Brooks as CEO.
But how independent is Binance.US? The issue plagued a recent fundraiser that included venture capitalists like GreatPoint Ventures, according to the Times.
Brooks has reportedly offered GreatPoint a $ 100 million fundraiser to prelude a possible Binance.US IPO. He reassured potential investors that Binance’s US division is independent from the rest of the company and will fully comply with US regulations. This meant adhering to strict protections against money laundering and know your customer.
But two factors scared GreatPoint off, according to Ray Lane, its managing partner, who spoke to The Times. The first was a DOJ-IRS investigation into possible money laundering and tax evasion violations. And second, Zhao’s stake in the so-called independent company – around 90% of Binance.US.
“How could we feel comfortable that this is an independent company using the same technology? Lane told The Times.
Brooks resigned from Binance.US in August, citing “differences in strategic direction.”
A Binance spokesperson told The Times that another round of fundraising for Binance.US is slated for soon and that IPO plans are still on track.