Binance, a cryptocurrency exchange, has been accused of engaging in questionable activities in recent months. According to a report in the Wall Street Journal, Binance attempted to recruit Gary Gensler as an advisor before he became chairman of the United States Securities and Exchange Commission (SEC) in 2018.
The report cites messages from Binance executives, claiming that Binance's co-founder, Harry Zhou, and the former head of Binance's venture investing arm, Ella Zhang, met with Gary Gensler in October 2018. 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.
A Binance employee reportedly said that Gensler would likely be "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 also details the relationship between Binance and Binance US, noting 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.US 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 the allegations, a Binance US spokesperson 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 time that Binance has been scrutinized for its compliance shortcomings. The latest WSJ report comes amid three U.S. senators accusing Binance of being a "hotbed of illegal financial activity." Last month, a Reuters report alleged that Binance US moved $400 million from its platform to a trading firm managed by Binance CEO Changpeng Zhao.