Bitcoin News

Binance Tried to Hire Gary Gensler in 2018 for Closer Ties with U.S. Regulators: Report

According to a Wall Street Journal article based on 2018 and 2020 texts, documents, and interviews with former Binance workers, the crypto exchange attempted to engage Gary Gensler as an advisor before he became SEC chairman.

The crypto business contacted Gensler in 2018 and 2019 when he was teaching at MIT, the Newspaper said. According to Binance officials’ messages reviewed by the newspaper, Ella Zhang, then head of Binance’s venture investment arm, and Harry Zhou, co-founder of Binance-invested startup Koi Trading, met with Gensler in October 2018. Zhou wrote:

“Gensler shared licensing techniques while declining advisorship.” A Binance employee said Gensler will “likely return in a regulators seat if Democrats win the 2020 election.” Gensler met Binance founder Changpeng “CZ” Zhao again in Tokyo in March 2019. Gensler became SEC chair in April 2021.

Gensler rebuffed all offers to counsel private corporations while at MIT, the newspaper said.

The report discusses Binance and Binance.US. Years ago, Binance management put up a US corporation to draw enforcement and regulatory investigations to conceal the exchange from regulatory monitoring.

In a presentation titled “Insulate Binance from US Enforcement,” staff proposed that Binance should treat the US unit as a distinct organization with a “purely contractual” connection.

“When Binance.US was formed, there was an agreement with the tech team to build up the tech infrastructure and give various types of assistance for the new US-regulated exchange,” a Binance representative told Cointelegraph. […] White label services assisted other exchanges. That’s why you’re seeing these old conversations between members of the two organizations.”

The crypto exchange further claimed that Binance and Binance.US “had the same ultimate beneficial owner,” which was public knowledge from the start. “Binance.US has had a fundraising round, but has not.” Binance said that the firms are different legal entities and that it has no U.S. customers. The exchange acknowledged its “errors” in expanding: “When growing at such a quick rate, we made some early missteps which have already been corrected.” After a huge investment in compliance expertise, procedures, and technology over the last two years, we are a totally different firm when it comes to compliance.”

In order to satisfy US regulatory and law-enforcement investigations, Binance may incur fines and penalties. Patrick Hillmann, Binance’s chief strategy officer, said the company is working with authorities to fix compliance concerns. Last year, compliance and investigative staff grew 500%.


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