Cryptocurrency exchange Binance sought to hire Gary Gensler as an advisor before he became chairman of the SEC, according to a Wall Street Journal report based on 2018 and 2020 messages and documents and interviews with former employees.
Gensler, the former chairman of the Commodity Futures Trading Commission, approached the cryptocurrency firm while teaching at MIT in 2018 and 2019, according to the Wall Street Journal.
Ella Zhang, then head of Binance Ventures, and Harry Zhou, co-founder of Binance Investments firm Koi Trading, met with Gensler in October 2018, according to a Binance executive seen by the newspaper. Zhou wrote in the chat after Gensler rejected the advisory position: “I observe that while Gensler declined advisor-ship, he was generous in sharing license strategies.”
According to the Binance employee, if the Democrats win the 2020 election, Gensler will “likely return to the regulator’s seat.” The second meeting was held in Tokyo in March 2019 with Gensler and Binance founder Changpeng Zhao "CZ". In April 2021, Gensler became SEC Chairman. During his time at MIT, Gensler was approached by several private companies as a consultant, but he turned down all offers, the newspaper reported.
The report highlights the relationship between Binance and its U.S. arm, Binance.US. Worried about regulatory scrutiny, executives at the exchange years ago took steps to reduce risk, including setting up a U.S. entity to attract law enforcement and regulatory investigations, shielding Binance from regulatory oversight. In a presentation titled “Isolating Binance from U.S. Law Enforcement,” employees suggested that Binance should have a “purely contractual” relationship with U.S. authorities, positioning it as a separate business. The cryptocurrency exchange also noted that Binance and Binance.US “have the same ultimate beneficial owner,” a fact that was known to the public from the start. “However, Binance.US recently had a funding round, while Binance.com has not.”
Binance further noted that it does not have any U.S. clients and that the companies are separate legal entities. The exchange also acknowledged previous “mistakes” in its expansion: “While growing at such a rapid rate, we made some initial mistakes that have now been corrected. After investing heavily in compliance talent, process and technology over the past two years, we are the leader in compliance today. A very different company."
Binance is reportedly preparing to face fines and penalties to settle pending regulatory and enforcement investigations in the United States. Binance chief strategy officer Patrick Hillmann said the company has been working with regulators to address past compliance issues. Compliance and investigators increased by 500% last year, according to the company.
