Binance Tried to Hire Gary Gensler to avoid regulatory scrutiny, WSJ report

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Key Takeaways

  • Reportedly, wanted to have “purely contractual” relationship with Binance.US, positioning it as a separate operation. 
  • Gensler was serving as a professor at MIT when Binance reportedly approached him in 2018 and 2019

Binance has been the subject of several concerning allegations in recent months. A latest Wall Street Journal Report claims that Binance tried to recruit Gary Gensler as an adviser before he became chairman of the United States Securities and Exchange Commission(SEC) in 2018.

The report citing messages from Binance’s executives, claims that Harry Zhou, co-founder of Binance-invested firm Koi Trading and Ella Zhang, former head of Binance’s venture investing arm, met with Gary Gensler in October 2018. Reportedly, after Gensler declined the advisor position, Binance CEO Changpeng “C.Z.” Zhou wrote in an official chat:

“I observe that while Gensler declined advisor-ship, he was generous in sharing license strategies.” Gensler was serving as a professor at the Massachusetts Institute of Technology when Binance reportedly approached him in 2018 and 2019.

As per a Binance employee, Gensler would be “likely back in a regulators seat if Dems win the 2020 election.” On April 14, 2021, Gary Gensler was appointed as SEC Chair. The WSJ report further goes on to detail the shady relationship between Binance and Binance US.

Referencing an internal presentation titled “Insulate Binance from U.S. Enforcement,” WSJ noted that Binance wanted to have a “purely contractual” relationship with the American unit, positioning it as a separate operation. Binance reportedly wanted to emphasize that Binance. U.S.—established in 2019 under a Delaware company called BAM Trading Services Inc.—was merely a company that would license Binance’s technology and brand.

The report goes on to cite examples of how Binance was focused on separating itself from its American entity to escape regulatory oversight. The Journal notes that one Binance.US employee mistakenly created a Google Form to onboard employees using an account under the international company, causing panic and mayhem. An employee said on Telegram that the error could be used as proof of “corporate veil piercing.”

In response to allegations, a Binance US spokesperson had stated, “Binance.US was founded specifically to serve U.S. customers with products and services that adhere to U.S. rules and regulations.”

This is not the first Binance has come under scrutiny for its compliance shortcomings. The latest WSJ report also comes amid 3 U.S. senators accusing Binance of being a “hotbed of illegal financial activity.” Last month, a Reuters report had that alleged Binance US moved $400 million from its platform to a trading firm managed by Binance CEO Changpeng Zhao.

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Saniya Raahath
Saniya Raahath

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