Binance, a cryptocurrency exchange, reportedly sought to hire Gary Gensler, the current chairman of the United States Securities and Exchange Commission (SEC), as an advisor in 2018 and 2019. The Wall Street Journal revealed this information through messages and documents from 2018 and 2020 and former employees’ interviews.
Approach to Gensler
While Gensler was teaching at the Massachusetts Institute of Technology (MIT), Binance executives approached him. Ella Zhang, the head of Binance’s venture investing arm, and Harry Zhou, co-founder of Binance-invested firm Koi Trading, met with Gensler in October 2018. Binance sought Gensler’s expertise to handle the US regulatory environment. Gensler declined the offer, but he did share licensing strategies.
Another meeting between Gensler and Binance founder Changpeng “CZ” Zhao took place in Tokyo in March 2019. At the time, a Binance employee thought Gensler might return to a regulatory seat if Democrats won the 2020 election. In April 2021, Gensler became the chairman of the SEC.
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Binance wasn’t the only company that tried to hire Gensler as an advisor while he was at MIT. Gensler declined all of the offers.
According to the Wall Street Journal, Binance’s executives took steps years ago to shield themselves from regulatory oversight. They set up an American entity, Binance.US, which would attract regulatory and enforcement inquiries. Employees suggested that Binance should have a “purely contractual” relationship with the American unit, positioning it as a separate operation.
Binance’s Response
Binance responded to the Wall Street Journal’s report by stating that Binance.US had a white label service agreement with the Binance.com tech team to provide technical infrastructure and support. Both companies shared the same ultimate beneficial owner. The exchange did not have any US customers, and both companies were separate legal entities. Binance acknowledged that they had made missteps during their expansion, which they had since rectified.
Binance is preparing to face fines and penalties in order to settle outstanding regulatory and law-enforcement investigations in the United States. The company has been working with regulators to remedy past compliance issues. Last year, compliance and investigations headcount increased by 500%.
Following the Wall Street Journal’s report, it is now known that Binance sought to hire the current SEC chairman as an advisor in 2018 and 2019. Additionally, it is clear that Binance has been taking steps to shield itself from regulatory oversight. The company is now preparing to face penalties in order to resolve ongoing regulatory and law-enforcement investigations.
