A new report has surfaced from the Wall Street Journal, outlining insider communications between members of Binance and Binance US. Additionally, the messages discuss how best to deal with regulatory oversight, which is a major point of interest for any business eager to do business in the United States. However, the report hints that Binance’s early days may have been fraught with the issues typical of dotcom startups. Less Compartmentalized Than Previously Believed Binance.US was set up shortly after Binance, aiming to separate the business procedures necessary for compliance with US regulators from those applied to the rest of the world. If US regulators were able to regulate Binance, such rules would have been imposed on the platforms’ offerings worldwide. For
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A new report has surfaced from the Wall Street Journal, outlining insider communications between members of Binance and Binance US.
Additionally, the messages discuss how best to deal with regulatory oversight, which is a major point of interest for any business eager to do business in the United States. However, the report hints that Binance’s early days may have been fraught with the issues typical of dotcom startups.
Less Compartmentalized Than Previously Believed
Binance.US was set up shortly after Binance, aiming to separate the business procedures necessary for compliance with US regulators from those applied to the rest of the world. If US regulators were able to regulate Binance, such rules would have been imposed on the platforms’ offerings worldwide. For instance, derivatives would have been off the table, as companies that offer them in the US fall under the purview of the SEC.
However, according to messages viewed by WSJ reporters, this compartmentalization has not been as strict in its early days. For instance, Binance.US’s software appears to have been maintained by Binance’s team, including incidents where updates were accidentally pushed to the live platform ahead of time by the global staff.
Further messages suggested that at least part of Binance.US’s budget was overseen by Binance – as were certain areas of process management, as evidenced by requests for reports on weekly duties. On another note, the two companies’ staff also mingled during team-building events. Although there is nothing inherently wrong with this, it could hint coordination between the two was more substantial than previously believed.
Gary Gensler Approached for Advisory Position
Another interesting fact reported is that current SEC chairman Gary Gensler was approached with a tentative position in an advisory capacity back in 2018 when he was still simply a professor at MIT. This was further corroborated in a Twitter live held by CZ.
Live during a Twitter Space, @cz_binance:
> Now owns 5 suits (didn’t sound very convincing?)
> Binance works with people in over 180 countries -> happy to have built something of meaning
> Community has helped a lot
> He doesn’t go to the office in Dubai often pic.twitter.com/ylQRlig1YX— CryptoPotato Official (@Crypto_Potato) March 3, 2023
Although Gensler declined the offer, he reportedly offered some cordial advice on how to comply with US authorities as a professional courtesy.
Addressing the allegations, a spokesperson for Binance acknowledged that compliance procedures were unfortunately not as rigid in the platforms’ early days, owing to inexperience. However, the spokesperson also stressed that this issue has been fixed long ago.
“We acknowledge that we did not have adequate compliance and controls in place during those early years. We are a very different company today when it comes to compliance. […] Binance.US was founded specifically to serve U.S. customers with products and services that adhere to U.S. rules and regulations.”
Furthermore, the spokesperson stressed that, unlike FTX or other companies, neither Binance nor Binance.US ever co-mingled user funds with funds necessary for day-to-day operations.