​WSJ: Binance tried to hire the SEC chair as adviser in 2018

What’s new? Crypto exchange Binance tried to hire Gary Gensler as an adviser before he became chairman of the US Securities and Exchange Commission (SEC), according to a report by The Wall Street Journal based on reports and documents from 2018 and 2020, as well as interviews with former employees. Reports obtained by the Journal reveal that Ella Zhang, then head of Binance’s venture capital arm, and Harry Zhou, co-founder of Binance-funded firm Koi Trading, met with Gensler in October 2018. Back then he refused the position of adviser to the exchange.

The WSJ material

What else does the WSJ report? Binance CEO Changpeng Zhao noted in correspondence with employees that, “while Gensler declined advisor-ship, he was generous in sharing license strategies.” At the same time, one employee wrote that Gensler will “likely back in a regulators seat if Dems win the 2020 election.” A second meeting was held in March 2019 in Tokyo between Gensler and Zhao. In April 2021, Gensler became chairman of the SEC.

According to the WSJ, Gensler was approached by several private companies while teaching at MIT to become an adviser, but he declined all offers.

The Journal report also highlights the relationship between Binance and its US arm. Fearing scrutiny from regulators, exchange executives took steps several years ago to mitigate risk, including the creation of Binance.US, which would have shielded the global exchange from oversight by authorities. In a presentation titled “Insulate Binance from US Enforcement,” staff suggested the exchange have a “purely contractual” relationship with Binance.US, positioning it as a separate entity.

A Binance spokesman told Cointelegraph that the global exchange provided tech, infrastructure, and other support to the US arm when it was created. He also noted that Binance and Binance.US have “the same ultimate beneficial owner,” a fact the public has known all along. “Binance.US however has recently gone through a funding round, whereas Binance.com has not.”

Binance also noted that the exchange has no US customers and that the companies are separate legal entities. The company acknowledged its previous mistakes during the expansion due to rapid growth and noted that they have been corrected. Last year, for example, the number of compliance and investigative staff increased by 500%. And in February, Binance chief strategy officer Patrick Hillmann said the exchange was willing to pay a fine to drop charges from US regulators.

Earlier, Republicans began investigating Gary Gensler’s ties to the bankrupt FTX crypto exchange. Last year, congressmen also accused the head of the SEC of close ties with the platform, through which it could gain privileges.