German Regulator Raised Concerns About Binance CEO Before License Application Withdrew
Saturday 29th July 2023 06:28 AM
German regulator expressed concern about Binance CEO before license application was withdrawn
The German Federal Financial Supervisory Authority, or BaFin, reportedly advised cryptocurrency exchange Binance to withdraw its license application due to concerns with its CEO Changpeng Zhao (CZ) and the company’s structuring.
According to a July 28 story in The Wall Street Journal, BaFin advised Binance that Zhao may not have passed a “fit and proper” test under the financial watchdog’s regulatory guidelines. The regulator’s guidelines for applying for a license establish that CEOs – in this case referring to Zhao – must “have the required professional qualifications and enjoy a good reputation to run an institution and dedicate sufficient time to the performance of their duties.”
BaFin also reportedly told Binance that the structure of the company made regulatory oversight difficult. Binance announced on July 26 that it had withdrawn its license application in Germany, saying at the time that the decision was based in part on focusing the company’s effort on complying with the European Union’s Markets in Crypto Assets (MiCA) framework.
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Key Points:
- According to the WSJ, Binance CEO and Changpeng Zhao (CZ) have been reviewed by the German regulator, but the exchange has denied the information.
- German Federal Finance (BaFin) advised Binance to withdraw its license application based on concerns about the complex structure of Changpeng Zhao and Binance.
- The cryptocurrency exchange said it has actively withdrawn its license application and will continue to cooperate with the country’s regulatory authorities.
Germany’s financial regulator advised Binance to withdraw its license application because of concerns about founder Changpeng Zhao (CZ) and the cryptocurrency company’s complex structure, according to people familiar with the decision and an internal Binance document viewed by the Wall Street Journal.
According to a July 28 report from The Wall Street Journal, BaFin advised Binance that CZ may not have passed a “fit and proper” test under the financial watchdog’s regulatory guidelines. According to the regulator’s requirements for a license application, managing directors CZ must have the necessary professional credentials, be in good standing, and commit enough time to carry out their duties in order to manage an institution.
A spokesperson for Binance told Cointelegraph that The Wall Street Journal’s story was incorrect and said the exchange had actively pulled back and cooperated with regulators. The exchange should have given specific feedback on CZ-related details at the time of publication.
The world’s largest cryptocurrency exchange announced on July 26 that it had withdrawn its application in Germany, saying at the time that the decision was based in part on centralizing the company’s efforts into compliance with the European Union’s Crypto Asset Market (MiCA) framework.
The move comes after pulling out of markets including Austria, Belgium, and the Netherlands and when regulators sued its US arm for operating an unregistered exchange.
Currently, Binance and its CEO are facing legal actions brought by the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) for allegedly violating securities laws and corresponding transaction instructions.
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