Binance’s Attempts to Appease SEC Chairman Gensler for US Regulatory Relations Revealed – Here’s What Occurred

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Binance And Bitcoin. Source: Adobe

Binance contacted the US Securities and Exchange Commission (SEC) chairman Gary Gensler in 2018 and 2019 to become an advisor for their firm. This is according to a new bombshell report published by the Wall Street Journal on Sunday. The report claims that Binance embarked upon a campaign to “neutralize” US authorities, fearful of prosecution, and cite documents and messages from 2018 to 2020.

At the time, Gensler was a teacher at the Massachusetts Institute of Technology; previously, he was the chairman of the Commodity Futures Trading Commission (CFTC). At the time, Binance employees told their colleagues that Gensler was likely to move “back in a regulators seat if Dems win the 2020 election”.

Gensler was elected chairman of the SEC in April 2021. He declined the invitation to be an advisor to Binance. However, Gensler “was generous in sharing licensing strategies” with Binance executives, according to Harry Zhou. He met with Gensler in October 2018 along with at-the-time head of Binance’s venture capital division, Ella Zhang.

Gensler also held a video call with Binance founding founder Changpeng Zhao in March 2019, interviewing him for a cryptocurrency class he would be teaching at MIT, starting in the summer of 2019.

Binance Fears Regulatory Crackdown

Binance’s efforts to butter up US regulators come amid fears that the cryptocurrency exchange might fall foul of a regulatory crackdown in the country. In recent weeks, the US crypto crackdown has been intensifying. The SEC has taken action against Kraken over its crypto staking services and accused USD-backed Binance USD (BUSD) stablecoin issuer Paxos of issuing unlicensed securities.

According to reports in the crypto press this weekend, agency staff believe that Binance.US, Binance’s US subsidiary, is operating as an unregistered securities exchange. It’s important to note that the views of the staff do not necessarily reflect the views of the agency’s five commissioners, a majority of whom would need to sign off if any enforcement action against Binance.US were to be a reality.

But Commission chair Gensler has in the past said that he thinks the majority of crypto trading platforms should register as securities exchanges, meaning they would be required to follow the SEC’s disclosure and compliance guidelines.

Binance – The Dominant Exchange

Binance is by far the most important cryptocurrency exchange in the world. According to CoinMarketCap, the exchange had trading volumes exceeding $11.1 billion over the past 24 hours. Coinbase’s second place finish pales in comparison, with trading volumes of less than $1.0 billion over the same period.

According to The Block, in total, $545 billion was traded in volumes in February, over 60% of the cryptocurrency market’s total trading volume for the month of $878 billion. But Binance’s dominance may come under threat if its US subsidiary starts facing a higher degree of regulatory scrutiny/enforcement.

But that’s not to say that Binance’s US rivals, like Coinbase, aren’t facing the same problems. Coinbase is preparing to defend itself against the SEC over its staking service, as the SEC views crypto staking services as unregistered security offerings.

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