Amid the major fallout of several firms in the crypto space last year, the U.S. Securities and Exchange Commission (SEC) has increased its scrutiny in the crypto space. The latest report from Wall Street Journal on Sunday, March 5, shows that the world’s largest crypto exchange Binance once devised a plan to avoid any regulatory scrutiny in the United States. This was way back in 2019 when Binance started its operations in the country.
The WSJ report states that any lawsuit from the U.S. regulators, who had signaled a crackdown on unregulated offshore crypto players, might have served as a “nuclear fallout” for Binance’s business and its officers. The WSJ report cites warnings initiated by Binance executives to their employees in a private chat back in 2019.
As per the documents, Binance planned to neutralize U.S. authorities. Citing the internal documents, the publication reported:
“The strategy centered on building a bare-bones American platform, Binance.US, that would license Binance’s technology and brand but otherwise appear to be wholly independent of Binance.com. It would shield from U.S. regulators’ scrutiny the larger Binance.com exchange, which would exclude U.S. users”.
As per the interviews, messages, and documents reviewed, WSJ reports that Binance and Binance.US are working extremely closely than what they have reported. These two entities have been mixing staff and finances and sharing an affiliated entity that bought and sold digital assets.
Also, Binance developers from China maintained the software code for the digital wallets of Binance.US’s users. Thus, it allowed the global entity of Binance to get access to US’s customer data.
In an email later to Reuters, a Binance spokesperson said: “we have already acknowledged that we did not have adequate compliance and controls in place during those early years…we are a very different company today when it comes to compliance.”
Binance Tried Hiring Gary Gensler
Before SEC chief Gary Gensler took the helm of affairs, Binance was reportedly in talks of hiring him. This was back in 2018 and 2019, when Gensler was a professor at the Massachusetts Institute of Technology.
Former executives at Binance’s venture arm – Ella Zhang and Harry Zhou – conducted a few meetings with Gensler back in October 2018. Citing the chat messages, WSJ has quoted Binance chief Changpeng Zhao stating: “I observe that while Gensler declined advisor-ship, he was generous in sharing license strategies”.
Previously Binance has also tapped US government officials as advisers to its platform. However, currently its facing growing regulatory pressure. As a result, Changpeng Zhao is contemplating an exit from the Voyager deal.