Binance.US Investors Drop Out After CEO Change and Ownership Concerns

The US Franchise of the largest crypto exchange remains optimistic despite questions regarding ownership and independence.

Binance US Loses Deal and CEO

The US franchise of Binance, Binance.US, has seen a $100 Million capital funding round fail amidst the fallout from the loss of CEO Brian Brooks at the start of August. Questions have begun to surface regarding the independence of the US branch of the world’s largest crypto exchange. 

Reports from the New York Times and Business Insider have surfaced that the relationship between Brooks and Binance.US became untethered after a venture capitalist investment to grow the ownership collapsed. The reports have called the independence of Binance.US into question after GreatPoint Venture, principal investor of a $100 million fundraising round, got scared off by the perceived connections to the parent company’s ownership.

“GreatPoint entered discussions with Mr. Brooks about a partial investment in Binance.US. The investors initially drew comfort from assurances by Mr. Brooks that Binance.US would be run independently from and follow all U.S. regulations,” the NY Times report reads. “But with U.S. authorities investigating Binance over money laundering and tax issues […] and Mr. [Changpeng] Zhao’s (CZ) ownership of Binance.US hovering around 90 percent, GreatPoint decided against making an investment.”

There are definitely many questions surrounding the US franchise at this time, especially the ownership by CZ. The franchise is clearly not as independent as perceived. The loss of a CEO with the institutional connections and the first round of funding is certainly not the ideal start to an initial public offering that Binance could have hoped for. 


Walk, Not Run

Despite the questions, CZ confirmed that the company is receiving plenty of interest regarding a potential initial public offering. Binance.US continues to fundraise for the $100 million and it’s been reported that the deals could close as soon as next month. 

“There is significant interest from top-level investors, and they expect they will close a round shortly,”  CZ told Bloomberg on August 19. “Binance.US also aims to IPO in the not too distant future. It’s just a matter of time.”

Binance.US also confirmed who will potentially succeed Brooks as CEO. Joshua Sroge has been tapped as the interim CEO since Brooks’s abrupt resignation. Sroge originally joined Binance.US in January 2020, and previously served as CFO. Sroge confirmed to the NY Times that the company has hopes to expand its board of directors to meet the growing regulatory needs.

With the IPO still on track and regulators beginning to swarm, it’s important for Binance to get this right. Investors remain cautious and rightfully so. There are major questions still left unanswered regarding the independence of Binance.US and regulatory scrutiny. The pathway towards emulating Coinbase appears unclear without these questions being answered.

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