The Wall Street Journal: Binance attempted to recruit SEC chairman, closely tied to Binance US, lacks independence

The Wall Street Journal published a lengthy report detailing Binance's struggles and efforts in dealing with regulatory pressures from the United States in recent years. The report, based on interviews with several Binance employees and internal Telegram conversations, exposed the intertwined relationship between Binance and Binance.US, revealing that the independence Binance has long emphasized does not actually exist.

Once Attempted to Recruit SEC Chairman

The revolving door between politics and business, where lawmakers move between regulatory agencies and industry, has long been a common practice on Wall Street and in the cryptocurrency space. According to The Wall Street Journal, multiple former employees of Binance and internal Telegram conversations indicate that Binance contacted the Chairman of the U.S. Securities and Exchange Commission (SEC), Gary Gensler, in 2018 and 2019 in an attempt to persuade him to serve as an advisor.

At the time, an employee of Binance stated:

Mr. Gary Gensler teaches a blockchain course at the Massachusetts Institute of Technology, but if the Democratic Party wins the 2020 presidential election, he is likely to return to a regulatory position.

In October 2018, Binance's head of venture capital, Ella Zhang, and Harry Zhou met with Gensler, during which he mentioned:

I found that although Gensler declined the advisory role, he was very generous in sharing information on obtaining licenses.

A source close to Gensler revealed that during his tenure at MIT, many private companies, including Binance, invited him to serve as an advisor, all of which were declined. Binance founder, Changpeng Zhao, met with Gensler in Tokyo in March 2019, and the latter became the SEC Chairman in April 2021.

The focus of the report is on Binance's operational strategies over the years in response to regulatory pressures in the United States.

Binance and Binance.US Are Closely Linked

While initially catering mainly to users in China and Japan, about one-fifth of Binance's users are located in the United States. In 2019, a Binance executive warned colleagues in a private chat group that any lawsuit from U.S. regulators would be as devastating to Binance's business and management as nuclear radiation.

To alleviate regulatory pressure in the U.S., Binance established Binance.US as a core strategic move to avoid scrutiny of Binance.com. However, The Wall Street Journal pointed out that the relationship between Binance and Binance.US is more complex than publicly disclosed, with intertwined staff and finances, and a code developed by Binance itself, potentially giving Binance access to U.S. user data.

Citing internal chat records from 2019, The Wall Street Journal confirmed the close relationship between Binance and Binance.US.

Before the official launch of Binance.US in 2019, the platform started trading a few minutes earlier than expected, causing chaos in the Binance Telegram group:

Why did trading start?? Who started trading? Didn't we set a trading timer? Someone started trading early, who did it? Why?

Changpeng Zhao eventually provided an answer:

A Shanghai engineer made an operational mistake.