​Binance CEO warns employees about surveillance of internal correspondence

What’d new? Analyst Colin Wu said that Changpeng Zhao, the head of crypto exchange Binance, sent an internal letter to his employees warning them that the company’s internal emails were being monitored by law enforcement agencies. According to Wu, the US Securities and Exchange Commission (SEC) has already disclosed a number of chat records, causing huge damage to Binance.

SCOOP: Binance CEO CZ released an internal letter today to talk about the employee chat records disclosed by the SEC, saying that it has caused huge damage to the reputation; reminding employees that investigators will ask for your chat logs. And he cited this tweet first… pic.twitter.com/41g9KSIi93 — Wu Blockchain (@WuBlockchain) June 8, 2023

What else is known? According to Wu, Zhao wrote the following text to his employees:

“In tough times, let’s keep our heads down and keep building products people use. While we may still see other chat logs of disgruntled employees ranting, or other things we (or I) were not careful with saying in the past, they will also find that we continue to hold ourselves to a high ethical standard and, most importantly, we have always gone above and beyond to protect our users.”

Wu also claims that Zhao cited a tweet by crypto investor and Cinneamhain Ventures (CEHV) partner Adam Cochran in his letter, in which he posted numerous screenshots of Binance employees’ chats.

1/15Evidence from SEC case against Binance including internal chat logs, first between Sam Lin (former compliance lead at Binance) and Alivn (previously head of BD)First is their convo about equity bonuses where Sam talks about risks of holding BNB pic.twitter.com/96IfwJEUOT — Adam Cochran (adamscochran.eth) (@adamscochran) June 7, 2023

Cochran said that the SEC relies on the information in the correspondence to form evidence of Binance’s involvement in violating the law. In particular, the agency obtained a transcript of the conversation, which refers to the unblocking of transactions for users from the United States, the reasons for the fall of the BNB token, and the possibility of circumventing regulatory restrictions to operate the exchange without a license.

About the SEC’s case against Binance. On June 5, the SEC filed 13 charges against crypto exchange Binance, its US subsidiary Binance.US, as well as personally against the companies’ founder Changpeng Zhao. The charges include operating unregistered exchanges, broker-dealers, and clearing agencies, misrepresenting control and oversight of trading on the Binance.US platform, and unregistered offerings and sales of securities.

On June 6, the SEC requested that the assets of Binance.US customers be frozen to ensure their protection and eventual recovery. The regulator also provided data from the platform’s financial report showing that it earned $410 million since it opened in 2019.

It later became known about the testimony of former Binance.US executives Catherine Coley and Brian Brooks, who were part of the SEC lawsuit. Coley testified about Binance’s significant influence over its US subsidiary, and Brooks stated that Binance.US “was, in fact, heavily dependent on Zhao.”

Meanwhile, on June 8, the US subsidiary, Binance.US, announced the delisting of ten assets and the termination of the over-the-counter trading. And on June 9, it was decided to suspend US dollar deposits and close fiat withdrawals on June 13, 2023. The exchange team called these steps proactive, noting that for a while there will be support for operations only with cryptocurrencies.