Binance CEO addresses chat records disclosed by the SEC

Binance CEO Changpeng Zhao has issued an internal address to company staff, asking them to focus on work and developing products people can use. The internal memo comes after the United States Securities and Exchange Commission (SEC) disclosed chat records between Binance employees in an attempt to support its case against the largest crypto exchange by trading volume.

Also Read: Two key dates over the SEC request to freeze Binance assets

Leaked chats between Binance staff

Binance CEO CZ has minimized the pieces of alleged evidence issued by the US SEC in chat conversations, terming the chatter among "disgruntled and ranting" employees from five years ago. In one of the screen captures, one of the employees alluded to Binance operating as an unlicensed securities exchange in the USA.

The conversation escalates to one telling the other to "take his BNB and dump it into USDT," the Tether stablecoin, adding, "It would be dumb to hold BNB." According to one of the persons in the conversation, the exchange's compliance side was a "sinking ship," akin to the Titanic, with an imbalanced risk vs. reward ratio.

For this reason, an individual selected for Chief Compliance Officer (CCO) candidacy even refused to sign off on Binance's Office of Foreign Assets Control (OFAC) compliance despite an offer for a 100% salary increase. For the layperson reader, OFAC bears the authority to permit certain transactions that would otherwise be prohibited under its regulations. Further, he notes that the then CFO, Wei Zhou, and CZ were cognizant of why no one wanted to be responsible for the OFAC reporting.

Citing Binance's head of compliance at the time:

There is no … way we are clean. I have seen NOTHING to prove we are.

Reportedly, Changpeng Zhao actively taught people "how to circumvent procedures, and how business priorities supersede any compliance training," adding that the BNB strategy is to survive for two years and then chuck.

Based on the revelations, "a translated recording of CZ specifically noted the 2019 blocking of US users and how they should approach slowly getting US users to use foreign KYC and ignore the IP addresses, and slow the roll-out of the news." Further, the regulator also claims to be in possession of internal conversations during the launch of Binance US, where Binance executives planned to allow access to US users through purchased KYC and VPNs.

The most damning, however, is alleged evidence pointing to loopholes supported by CZ where organizations can be "on-boarded through the US exchange but trade via .com with a special setup." Notably, this provision is meant to favor whales, with the tweet noting that it was the nature of their business.

Binance CEO pens an address to company staff

Acknowledging that the logs tarnished the company's reputation, CZ has urged Binance staff to focus on work even as the possibility of the regulator approaching them for information remains. The crypto billionaire has articulated that the company does not peruse staff chat logs, unlike the investigators, as it was their job. In a manner of speech (not direct), CZ cautioned employees that whatever they say in private via text could one day come to light and be used in a court of law.

Notwithstanding, the CEO has asked anyone unhappy with their job to consider a change of employment or employer. Further, he asserts that while there may be more embarrassing leaks to come, he and the company live in the present, where they continue to hold themselves to high ethical standards.

Further, Zhao underscores his commitment, and that of the company, toward protecting Binance users.