Binance chief says it will pull back on US investments for now

Binance chief executive Changpeng Zhao has said the company intends to pull back on potential investments in the US, as US regulators expand their crackdown on crypto companies.

Zhao, the sprawling crypto group’s co-founder, said in a tweet on Friday that Binance has “pulled back on some potential investments, or bids on bankrupt companies in the US for now”.

The announcement comes as the Securities and Exchange Commission has launched a number of enforcement actions aimed at big companies in the digital assets space, including exchanges Gemini and Kraken. New York regulators also recently halted the issuance of BUSD — a dollar-pegged token that carries Binance branding and is the third-largest of its kind in the crypto market.

“There is definitely more regulatory scrutiny . . . and more tightening over the industry overall,” Zhao said during a Twitter Spaces session earlier this week. He added it was likely banks had been asked by regulators to “either not work with crypto businesses completely, or be very cautious about working with crypto businesses”.

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

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

Binance US has been seeking to persuade regulators to approve a $1bn purchase of the assets of bankrupt crypto lender Voyager Digital. A spokesperson for Binance US insisted the Voyager deal has not been abandoned: “We want to be clear that Binance.com was not involved in the bidding process, and the Binance US-Voyager deal continues to move forward with all the necessary review processes.”

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

The deal is being reviewed by the Committee on Foreign Investment in the US (Cfius), a panel that reviews certain transactions involving foreign investment in the US for potential security risks.

“Cfius is a very big deal . . . it doesn’t make sense unless there is some real national security concern,” said one Washington lobbyist.

Earlier this month, Binance announced the suspension of US dollar transfers without providing a reason for 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 of less than $100,000.

The exchange said only 0.01 per cent of its monthly active users leveraged the US dollar for payments, although legal experts said that is not enough to put it beyond US regulators’ reach.

“If a company is using or transacting in the US dollar, even minimally, it could increase the likelihood that it is interacting with the US financial system and then potentially raising the ire of regulators,” said Joanna Wasick, partner at US law firm BakerHostetler.