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The German Federal Financial Supervisory Authority, BaFin, has reportedly recommended that cryptocurrency exchange Binance withdraw its licensing application due to concerns regarding its CEO Changpeng Zhao (also known as “CZ”) and the company’s structure. 
According to a report from The Wall Street Journal on July 28, BaFin expressed reservations about CZ passing the “fit and proper” test as per their regulatory guidelines. 
The test ensures that managing directors, like CZ, possess the necessary professional qualifications, a good reputation, and can dedicate enough time to effectively manage the institution. 
Additionally, BaFin raised concerns about the regulatory supervision of Binance due to the company’s complex structure. 
In response, Binance announced on July 26 that it had voluntarily withdrawn its license application in Germany. 
The decision was partly attributed to the company’s focus on aligning with the European Union’s Markets in Crypto-Assets (MiCA) framework. 
In contradiction to The Wall Street Journal’s report, a Binance spokesperson told Cointelegraph that the story was inaccurate. 
However, specific details about CZ were not provided in their response. 
Meanwhile, Binance is facing legal actions in the United States brought forth by the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) for alleged violations of securities laws and trading guidelines, respectively. 
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In an attempt to dismiss the CFTC lawsuit, Binance’s lawyers filed a court motion on July 27, arguing that the commission had overstepped its authority. 
Although no criminal charges have been filed at the time of publication, there have been reports of the U.S. Department of Justice (DoJ) investigating Binance for potentially violating U.S. sanctions on Russian entities. 
In response to the DoJ probe, Binance’s chief strategy officer, Patrick Hillmann, announced his departure from the firm on July 6. 
Despite being one of the world’s largest crypto exchanges, Binance does not have a physical headquarters. 
CZ has reportedly resided in Dubai since 2021, making it challenging for the SEC to serve him a legal summons in June. 
In conclusion, BaFin’s recommendation to withdraw the licensing application adds to the growing regulatory scrutiny faced by Binance, both in Germany and the United States. 
These developments may have implications for the exchange’s operations and compliance efforts in the crypto market. 
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BaFin Advises Binance to Withdraw Licensing Application

Crypto Intelligence

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