Crypto exchange BINANCE responded to harsh criticism and demands for answers about its business from US senators including Elizabeth Warren.
In a 14-page letter seen by Bloomberg, Chief Strategy Officer Patrick Hillmann described Binance’s work to build out its compliance program and team — but he also provided scant details on the company’s finances. The response failed to provide a lot of the information lawmakers asked for in their March 1 that called Binance a “hotbed” of illegal activity. Hillmann’s response said the company prioritizes regulatory compliance, citing “misconceptions” about the company.
A slew of agencies including the Justice Department, the Securities and Exchange Commission and Internal Revenue Service have been probing Binance for several years over various potential violations.
Warren, a Massachusetts Democrat, along with fellow Democrat Chris Van Hollen of Maryland and Republican Roger Marshall of Kansas, had asked Binance and Binance.US — also controlled by Binance Chief Executive Officer Changpeng “CZ” Zhao — to provide copies of balance sheets starting from 2017. They also demanded data on the number of US users by year, copies of internal policies relating to anti-money laundering and “know-your-customer” compliance procedures, as well as written policies regarding the relationship between Binance and Binance.US, among others.
The senators set a deadline of March 16 for Binance’s response and submission of the documents.
Read more: Binance a ‘Hotbed’ of Illegal Activity, US Senators Allege
“Binance and its related entities have purposefully evaded regulators, moved assets to criminals and sanctions evaders, and hidden basic financial information from its customers and the public,” the senators wrote. “Your actions have called into question the legitimacy of your business and the safety of your customers’ assets and raised concerns about the potential impact of these activities on the stability of the crypto market and the broader financial system,” the letter said.
Binance’s response, dated March 16, didn’t provide much of that information, but instead recounted the history of the company and its compliance measures. Hillmann recently told Bloomberg the company had compliance gaps in its early years that it has since closed, and that it wants to settle with the regulators.
A person with knowledge of the ongoing discussions between Binance and US regulators said information on finances and users has already been shared with regulators. The person, who asked not to be identified discussing confidential information, said the expectation is that the senators will reach out to the regulators for this information.
Read more: Binance Says It Had Compliance Gaps, US Regulator Talks Ongoing
Senator Marshall’s office said it had received a response from Binance.US and that it was evaluating it. Senators Warren and Van Hollen didn’t immediately respond to a request for comment.
Hillmann’s letter emphasized that Binance.US and Binance “are separate entities — contrary to suggestions in public reporting.” A recent Reuters article cast doubt on the extent to which the two entities were really independent of one another. The global entity had secret access to a bank account belonging to the US exchange, according to the Reuters report. A recent Wall Street Journal report also explored the relationship between the two entities.
In his response, Hillmann said that Binance has a team of about 750 core and supporting compliance staffers, including numerous members of various regulatory and law-enforcement agencies. It recently hired the former chief operating officver of crypto exchange Gemini, Noah Perlman, to be its new chief compliance officer. It also uses sophisticated software to stop illicit transactions, the letter said.
“Binance leverages both internal tools and tools from established third-party vendors to scan user transactions and profiles in real time,” the letter said. “Indeed, as a point of reference, between August 2021 and November 2022, Binance stopped over 54,000 transactions as a result of transaction monitoring alerts.”
The Binance letter comes just days after Binance.US won a victory in its quest acquire broker Voyager Digital despite objections from federal and state regulators.
— With assistance by Allyson Versprille
