Regulation

Binance tried to hire Gary Gensler in 2018 for closer ties with U.S. regulators: Report

Update (March 5, 9:22 p.m. UTC): This article has been updated to include Binance’s response. 

Crypto exchange Binance sought to hire Gary Gensler as an advisor before he became chairman of the United States Securities and Exchange Commission (SEC), according to a Wall Street Journal report based on messages and documents from 2018 and 2020, as well as interviews with former employees. 

Gensler was approached by the crypto firm while teaching at the Massachusetts Institute of Technology (MIT) in 2018 and 2019. During that tim, he was a former Commodity Futures Trading Commission chair as well.

Messages from Binance’s executives seen by the newspaper indicate that Ella Zhang, then head of Binance’s venture investing arm, and Harry Zhou, co-founder of Binance-invested firm Koi Trading, met with Gensler in October 2018. After Gensler declined the advisor position, Zhou wrote in the chat:

“I observe that while Gensler declined advisor-ship, he was generous in sharing license strategies.”

According to a Binance employee, Gensler would be “likely back in a regulators seat if Dems win the 2020 election.” The second meeting took place in March 2019 in Tokyo between Gensler and Binance’s founder Changpeng “CZ” Zhao. In April 2021, Gensler became the SEC chair.

As per the newspaper, Gensler was approached by multiple private companies to serve as an advisor while at MIT, which he declined.

The report highlights the relationship between Binance and its American arm, Binance.US. Fearing for regulatory scrutiny, the exchange’s executives took steps years ago to mitigate the risk, including setting up an American entity that would attract enforcement and regulatory inquiries, thereby shielding Binance from regulatory oversight.

In a presentation titled “Insulate Binance from US Enforcement”, employees suggested that Binance should have a “purely contractual” relationship with the American unit, positioning them as separate operations.

A spokesperson for Binance told Cointelegraph:

“When Binance.US was founded, there was an agreement with the Binance.com tech team to build out the tech infrastructure and provide other forms of support for the new US-regulated exchange. […] It was a white label service that supported other exchanges. That is why you’re seeing these old communications between members of the two organizations.”

The crypto exchange also noted that Binance and Binance.US “shared the same ultimate beneficial owner,” a fact known to the public since the beginning. “Binance.US however has recently gone through a funding round, whereas Binance.com has not.”

Binance further noticed that it does not have any US customers, and the companies are separate legal entities. The exchange also recognized taken previous “missteps” during its expansion:

“While growing at such a rapid pace, we made some initial missteps which have now been rectified. Following a massive investment in compliance talent, processes, and technology over the past two years, we are a very different company today when it comes to compliance.”

Binance is reportedly preparing to face fines and penalties in order to settle outstanding regulatory and law-enforcement investigations in the United States. Binance’s chief strategy officer Patrick Hillmann said the firm has been working with regulators to remedy past compliance issues. According to the company, compliance and investigations headcount increased by 500% last year.

Source Link

Share with your friends!

Products You May Like

Leave a Reply

Your email address will not be published. Required fields are marked *

Please enter CoinGecko Free Api Key to get this plugin works.
x  Powerful Protection for WordPress, from Shield Security
This Site Is Protected By
Shield Security