Binance.US’ $100m funding round remits on regulatory concern

The funding round had been intended as the first step in Binance.US 's moves toward an IPO

Regulatory concerns surrounding Binance.US and its owner, Changpeng Zhou (CZ), have reportedly culminated in investors backing out of a $100 million funding round.

The failed funding round also surprisingly prompted Binance.US CEO Brian Brooks' to step down after serving as its executive for just three months.

Brooks is the former Acting Comptroller of the Currency and former chief legal officer to rival exchange, Coinbase. He cited “strategic differences” while stepping aside.

The funding round had been intended as the first step in Binance.US 's path toward an initial public offering (IPO).

According to New York Times, Brooks had initially courted potential investors including Ray Lane from venture capital firm GreatPoint, and an executive at Japanese holding company, SoftBank, under assurances that Binance.US would comply with all US regulatory guidelines.

However, the investors reportedly backed out due to concerns surrounding CZ’s 90% ownership stake in Binance’s U.S.-based exchange, alongside anxieties regarding an ongoing investigation from U.S. authorities. CZ is reportedly being scrutinized over money laundering and tax issues.

NYT also reports that a lack of clear separation between the operation of Binance and Binance.US sparked concern among the investors.

Brooks announced his resignation publicly in a tweet on August 7.

A spokesperson for Binance.US stated that the company would continue to take steps toward their goal of completing an IPO in the US.

Despite the recent troubles, CZ still appears confident that Binance.US will be able to attract the investments they need for an IPO. He told Bloomberg in an interview published Aug. 19 that there is still interest from “top-level” investors, adding that Binance.US also aims to IPO in the not too distant future. It’s just a matter of time.

Binance has been under regulatory pressure in a range of jurisdictions in recent months. At the end of last June, UK’s Financial Conduct Authority (FCA) demanded Binance to halt all non regulated activities in the country. As a result of the FCA’s demand, major banks including HSBC UK have cut credit purchases to Binance.

Binance halted operations in Ontario (Canada) in June after the provincial government took a hard stance against cryptocurrency trading in general.