There have been multiple reports that four top executives have exited Binance in rapid succession. Several reports claim that these departures are due to the regulatory challenges Binance is experiencing – most pointedly, the fact that Binance is being sued by the US Securities and Exchange Commission (SEC).
The lawsuit targeting Binance was filed last month, with the SEC listing 13 charges against Binance and its founder and CEO, Changpeng Zhao.
The SEC’s complaint alleges:
- Operation of an unregistered exchange, broker, and clearing agency
- Unregistered off and sale of crypto assets
- Failure to restrict US investors from accessing Binance.com
- Misleading investors
A headline in Fortune described Binance as “plunging into crisis,” explaining the departures were a reflection of Zhao’s response to the US Justice Department investigation. While no criminal charges have been filed, rumblings about the potential for a criminal case against Binance have been around for many months. The article noted that the recent exit of former IRS agent Matthew Price has been followed by the departures of general counsel Hon Ng, chief strategy officer Patrick Hillmann, and SVP for compliance Steven Christie.
Zhao, or “CZ” as he is known, took to Twitter, calling the reports of executives fleeing a sinking ship as “FUD.”
4. More FUD about some departures. Yes, there is turnover (at every company). But the reasons dreamed up by the “news” are completely wrong.
As an organization that has grown from 30 to 8000 people in 6 years, from 0 to the world’s largest crypto exchange in less than 5 months…
— CZ 🔶 Binance (@cz_binance) July 6, 2023
Christie also took to Twitter to emphasize that his leaving the firm was all about personal or family reasons.
I usually don’t tweet much and try and keep a low profile, but wanted to clear the air about a couple of articles that were printed today. I can confirm that I am indeed leaving @binance, but the reasons for my departure are very different than what was reported.
— steven christie (@SKChristie9) July 7, 2023
He explained that “it is time for me to take some time for myself and my family, try and get healthier, lose the weight, start working on the “honey-do” list, start helping around the house, be more present for my kids…”
Hillman also Tweeted that he was leaving Binance on good terms and “it’s simply time for me to move on to the next challenge.”
But while CZ is describing the reports as all about fear, uncertainty, and doubt, the stress is certainly there as Binance is not just receiving scrutiny from US enforcement agencies but other agencies around the world.
In recent months, Binance has been exiting certain markets, and reports indicate that France is investigating the firm as well.
Binance remains the largest crypto exchange in the world, but like many crypto exchanges, compliance evolved over time as rules were adopted or enforced. That and there could be some regulators looking for enforcement trophies.
A report in WSJ.com from several days ago quotes a Binance spokesperson indicating they are hard at work to “proactively comply” with the new EU rules – under the recently approved MiCA legislation. But the question remains, will it be enough to keep past allegations at bay?