Binance Tried to Offer a Position to Gary Genslar in 2018, Report Claims
- Binance tried to offer an advisory role to the current Chairman of the Securities and Exchange Commission (SEC) in the 2018–2019 time period.
- The exchange’s executives met with Gary Genslar for the first time in October 2018, when Genslar was a professor at the Massachusetts Institute of Technology.
- The CEO of the exchange, Changpeng Zhao, met with Genslar in 2019 in Tokyo once again, but the latter refused to join the exchange.
- A WSJ report claims that the exchange established its US arm only to slip away from any regulatory oversight in the United States.
The world’s biggest crypto exchange by trading volume, Binance, has come under the media spotlight following the collapse of former rival crypto exchange FTX under the leadership of Sam Bankman-Fried, also known as SBF in the crypto space. Interestingly, a report claims that the leading exchange tried to hire the current Chair of the Securities and Exchange Commission (SEC), Gary Genslar, in 2018 but was unable to do so.
According to a report from the Wall Street Journal (WSJ), Binance approached Genslar, who is also the former chairman of the Commodity Futures Trading Commission (CFTC), while he was teaching at the Massachusetts Institute of Technology in 2018 and 2019. The report from the WSJ cited messages and documents from 2018 and 2020, along with interviews with former employees, as the source for the information.
Additionally, the report also claims that Genslar met with Ella Zhang, then head of Binance’s venture investing arm, and Harry Zhou, co-founder of Binance-invested firm Koi Trading, in October 2018 regarding the exchange’s offer. However, the SEC chair declined their offers. In a chat, Binance CEO Changpeng Zhao, also known as CZ in the crypto space, wrote:
“I observe that while Gensler declined advisor-ship, he was generous in sharing license strategies.”
As per a Binance employee, Gensler would be “likely back in a regulator seat if Dems win the 2020 election.” Interestingly, a second meeting between Genslar and Zhao took place in March 2019 in Tokyo. Finally, in April 2021, Genslar became the SEC Chair after declining several offers by companies regarding an advisory position during his time as an MIT professor.
The report also highlighted the relationship between Binance and the exchange’s US subsidiary, Binance.US. WSJ claims that the executives at the exchange took several steps to mitigate the risks associated with the US arm after they realized that regulators might step in to tame the industry. One of the steps was the creation of a US entity so that any regulatory oversight might be subjected to Binance.US and the parent entity would remain secure from any trouble.
The report claims that in a report called “Insulate Binance from US Enforcement,” the exchange decided that it would have only a “purely contractual” relationship with the US arm to prevent a US regulatory crackdown, positioning the US arm as a separate operation. A spokesperson from the exchange told CoinTelegraph:
“When Binance.US was founded, there was an agreement with the Binance.com tech team to build out the tech infrastructure and provide other forms of support for the new US-regulated exchange. […] It was a white label service that supported other exchanges. That is why you’re seeing these old communications between members of the two organizations.”
The exchange further noted that “while growing at such a rapid pace, we made some initial missteps which have now been rectified. Following a massive investment in compliance talent, processes, and technology over the past two years, we are a very different company today when it comes to compliance.”
As reported earlier by Bitnation, the leading exchange recently stated that it is not planning any layoffs, putting such rumours to rest. An official confirmed that the exchange is hiring for close to 500 roles and confirmed that they need to be filled in the first half of 2023. Furthermore, three United States senators, led by Elizabeth Warren, have sent a letter to CZ and Binance.US CEO Brian Shroder expressed his concerns regarding the companies’ activities.