Summary

  • Gary Gensler, former chairman of the Commodity Futures Trading Commission, is a senior advisor to Binance.
  • The Wall Street Journal reported that Gensler was hired by Binance to help the company navigate complex U.S. regulations.
  • Gensler's involvement with Binance has raised questions about the company's commitment to regulatory compliance.

A new report from the Wall Street Journal has uncovered explosive revelations about the relationship between Binance and Binance.US. The report, based on Telegram chats reviewed by the WSJ between 2018-2020, as well as interviews with unnamed Binance/US staff, suggests that the two cryptocurrency exchange platforms are far more intertwined than previously thought.

The report alleges that Binance’s attempt to neutralize U.S. authorities by launching Binance.US was driven by fear of a crackdown on unregulated offshore crypto players. The platform was designed to appear wholly independent, though it was actually licensed by Binance.

The WSJ also uncovered evidence that Binance had proposed having former SEC Chair Gary Gensler serve as an advisor, though the proposal was rejected. Gensler did, however, share some “license strategies” with the former head of Binance Labs, Ella Zhang, and Binance employee Harry Zhou.

Zhou was reportedly the driving force behind Binance’s attempt to establish a U.S.-based business that would invite inquiries from U.S. regulatory agencies and enforcement, thus shielding Binance from their scrutiny. In February 2019, Zhou incorporated a Delaware company, BAM Trading Services Inc., which became the operator of Binance.US.

The WSJ also uncovered evidence that Binance had discussed ways to keep U.S. customers on its global platform, despite announcing that it would stop accepting them. This included encouraging them to use a VPN to appear to be located in another country, as well as discussing whether U.S. customers had offshore entities they could use to access Binance.

The revelations have put Binance and its CEO Changpeng Zhao at risk of prosecution. The Securities and Exchange Commission and the Justice Department have been investigating Binance’s relationship to Binance.US since at least 2020, and a bipartisan group of senators have asked Binance to answer a series of questions, alleging that the company had “hidden basic financial information from its customers and the public.”

Binance executives and employees declined to comment on the report, while Binance spokeswoman did not respond to requests to make Lim or Zhao available for comment. Zhao took to Twitter on Sunday night to remind his 8.2 million followers to ignore “FUD, attacks and fake news.”