A new report has surfaced from the Wall Street Journal, outlining internal communications between members of Binance and Binance US.
In addition, the posts discuss how best to deal with regulatory oversight, which is a key concern for any company eager to do business in the United States. However, the report hints that Binance’s early days may have been fraught with the problems typical of dotcom startups.
Less compartmentalized than previously assumed
Binance.US was founded shortly after Binance, with the aim of separating the business procedures required for US regulator compliance from those applied to the rest of the world. If US regulators could regulate Binance, such regulations would have been imposed on the platforms’ offerings worldwide. Derivatives, for example, would have been off the table since companies offering them in the US fall within the scope of the SEC.
However, according to reports reviewed by WSJ reporters, this compartmentalization was not so strict in the beginning. For example, Binance.US’s software appears to have been maintained by Binance’s team, including incidents where updates were accidentally pushed to the live platform in advance by the global staff.
Further reports suggested that at least part of the Binance.US budget was overseen by Binance – as well as certain areas of process management, as evidenced by requests for reports on weekly tasks. On the other hand, the staff of the two companies also mingled during team building events. While there is nothing wrong with this, it may indicate that coordination between the two was greater than previously believed.
Gary Gensler approached for advisory role
Another interesting fact being reported is that current SEC Chairman Gary Gensler was approached with a tentative position in an advisory role in 2018 when he was still just a professor at MIT. This was further confirmed in a Twitter live held by CZ.
Live during a Twitter Space, @cz_binance:
> Now owns 5 colors (didn’t sound very convincing?)
> Binance works with people in over 180 countries -> happy to have built something meaningful
> Community helped a lot
> He doesn’t often go to the office in Dubai pic.twitter.com/ylQRlig1YX
— Official CryptoPotato (@Crypto_Potato) March 3, 2023
Although Gensler declined the offer, he reportedly offered some cordial advice as a professional courtesy on how to comply with US authorities.
A Binance spokesperson responded to the allegations, acknowledging that compliance procedures in the early days of the platforms were unfortunately not as rigid due to inexperience. However, the spokesman also emphasized that this problem has been solved a long time ago.
“We recognize that in those early years we didn’t have enough compliance and controls. We are a completely different company these days when it comes to compliance. […] Binance.US was established specifically to provide US customers with products and services that comply with US rules and regulations.”
Further, the spokesperson emphasized that unlike FTX or other companies, neither Binance nor Binance.US ever mixed user funds with funds needed for day-to-day operations.
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