Binance Faces Executive Exodus as DOJ Investigation Looms
BY PYMNTS | JULY 9, 2023
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Binance has reportedly seen several executives depart amid fears of a U.S. Justice Department investigation.
The cryptocurrency giant’s general counsel, head of investigations and chief strategy officer are all among the employees who have left in recent weeks, The Wall Street Journal reported Friday (July 7), citing interviews and court documents.
The report says Binance also laid off dozens of employees last week, as it plans to reduce its head count in the U.S.
On Twitter, Binance founder Changpeng Zhao rejected the notion that the departures are a sign of turmoil at the crypto exchange.
“As markets and the global environment for crypto changes, as our organization evolves, and as personal situations change, there is turnover at every company,” he wrote.
Patrick Hillman, the company’s chief strategy officer, tweeted Thursday he was leaving the company as he and his family prepared to welcome a new baby.
“It’s true that I am leaving Binance, but I’m doing so on good terms. I continue to respect and support @cz_binance and am grateful for having had the incredible opportunity to work under his leadership.”
Compliance officer Steven Christie also took to Twitter to explain his departure, saying it was down to his wife wanting him to spend more time at home.
However, the WSJ report says executives are worried that the Justice Department will file charges against Zhao and his company, already facing legal action by other regulators. One former employee said many people still with the firm believe that Zhao is putting the company at risk by retaining control of Binance.
Reports of a Department of Justice investigation into Binance’s operations first surfaced last year. A company spokesperson declined to comment when reached by PYMNTS beyond referring to the tweets by Zhao, Hillman and Christie.
The news follows weeks of setbacks for the company, which was sued last month by the U.S. Securities and Exchange Commission for allegedly committing a variety of securities law violations.
“Through 13 charges, we allege that Zhao and Binance entities engaged in an extensive web of deception, conflicts of interest, lack of disclosure and calculated evasion of the law,” SEC Chair Gary Gensler said in a news release.
In its public response to the SEC suit, Binance argued that “the Commission has determined to regulate with the blunt weapons of enforcement and litigation rather than the thoughtful, nuanced approach demanded by this dynamic and complex technology … the SEC’s actions undermine America’s role as a global hub for financial innovation and leadership.”
The company has said plans to “vigorously defend” its platform and U.S. operations in court.
As PYMNTS wrote last month, the SEC’s case against Binance — as well as its action against Coinbase, filed around the same time — “mark a sharp escalation of the SEC’s efforts to rein in the crypto industry as the Gary Gensler-chaired regulator decides that after a year full of fraudulent evaporations and disastrous bankruptcies as exemplified by the November blowup of the crypto exchange FTX and the rapid fall from grace of its founder, Sam Bankman-Fried, innovation run amok might be worth stifling.
“What’s most worrying about the SEC’s 136-page complaint against Binance,” that report added, “is that it paints a picture not too dissimilar from the situation at FTX.”
