According to a recent Wall Street Journal report, Binance, the world’s largest cryptocurrency exchange, had attempted to hire Gary Gensler as an advisor in 2018 in order to avoid regulatory scrutiny in the United States.
Notably, this strategy was conceived before Gensler was appointed Chairman of the US Securities and Exchange Commission (SEC).
The report claimed that Gensler, who had previously served as the head of the U.S. Commodities Futures Trading Commission (CFTC), was approached by a cryptocurrency firm in 2018 and 2019 while he was working as a professor at the Massachusetts Institute of Technology (MIT).
WSJ stated in the report:
“The strategy centered on building a bare-bones American platform, Binance.US, that would license Binance’s technology and brand but otherwise appear to be wholly independent of Binance.com. It would shield from U.S. regulators’ scrutiny the larger Binance.com exchange, which would exclude U.S. users”.
The messages of Binance officials obtained by the media outlet reveal that in October 2018, Harry Zhou, co-founder of Koi Trading, a Binance-funded company, and Ella Zhang, who was then in charge of Binance’s venture investing division, met with Gensler. Citing the chat messages, Zhou stated: “I observe that while Gensler declined advisor-ship, he was generous in sharing license strategies.”
Gensler and Changpeng “CZ” Zhao, the founder of Binance, had a second meeting in Tokyo in March 2019. During his tenure at MIT, Gensler reportedly received several requests to serve as an advisor for private corporations, all of which he declined.
Gensler was later appointed chair of the SEC in April 2021, and he has since led an aggressive regulatory scrutiny and crackdown on the cryptocurrency industry.
Binance, as reported last month, is preparing to pay fines and penalties in response to ongoing regulatory and law enforcement investigations in the United States. Binance’s Chief Strategy Officer, Patrick Hillmann, stated that the company is collaborating with regulators to resolve past compliance challenges.
A representative for Binance also acknowledged that the company did not “have adequate compliance and controls in place during its early years and that it is a different company today when it comes to compliance.”
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