Binance in Crisis: Executives Flee Storms

Binance, the world’s largest cryptocurrency exchange by trading volume, is facing a series of regulatory challenges and internal turmoil, as several executives have left the company amid growing scrutiny and pressure from authorities.

According to a report by The Block, at least five senior executives have departed Binance in the past three months, including:

• Brian Brooks, the CEO of Binance.US, who resigned after less than four months on the job, citing “differences over strategic direction”.
• Jonathan Farnell, the director of compliance, who left after less than three months, following the suspension of Binance’s services in the UK by the Financial Conduct Authority (FCA).
• Josh Goodbody, the director of growth and institutional business for Europe and Latin America, who joined Huobi as its chief strategy officer.
• Ella Zhang, the head of Binance Labs, the venture arm of the exchange, who left to pursue other opportunities.
• Arike Rodrigues, the head of human resources, who resigned for personal reasons.

The report also said that Binance is struggling to hire and retain talent, as many candidates are deterred by the regulatory uncertainty and the lack of a clear corporate structure and vision.

Binance has been under fire from regulators around the world, who have accused the exchange of operating without proper licenses, facilitating money laundering and tax evasion, and offering risky products to retail investors.

Some of the countries that have taken action against Binance include:

• The UK, where the FCA banned Binance from conducting any regulated activity and issued a consumer warning about its services.
• Japan, where the Financial Services Agency (FSA) issued a warning that Binance is operating without registration and may be violating the law.
• Italy, where the Commissione Nazionale per le Società e la Borsa (CONSOB) warned that Binance is not authorized to provide investment services and activities in the country.
• Germany, where the Federal Financial Supervisory Authority (BaFin) warned that Binance may have violated securities laws by offering tokenized stocks without publishing a prospectus.
• Thailand, where the Securities and Exchange Commission (SEC) filed a criminal complaint against Binance for operating a digital asset business without a license.
• Singapore, where the Monetary Authority of Singapore (MAS) said it is reviewing Binance’s application to operate in the country under the Payment Services Act.
• Canada, where several provinces have issued warnings or cease-and-desist orders against Binance for offering securities or derivatives without authorization.
• The US, where the Commodity Futures Trading Commission (CFTC) is reportedly investigating whether Binance allowed US residents to trade derivatives linked to cryptocurrencies.

Binance has denied any wrongdoing and said it is committed to complying with local laws and regulations. The exchange has also taken some steps to address the regulatory concerns, such as:

• Reducing the maximum leverage for futures trading from 125x to 20x.
• Discontinuing the offering of tokenized stocks.
• Implementing mandatory identity verification for all users.
• Hiring former regulators and compliance experts to strengthen its legal and risk management teams.

However, these measures may not be enough to appease the regulators and restore trust in the exchange. Binance’s founder and CEO Changpeng Zhao, also known as CZ, has admitted that the exchange needs to improve its communication and collaboration with regulators and stakeholders.

He has also said that he is open to stepping down from his role and finding a successor who can lead Binance through its transition from a technology startup to a regulated financial institution.

“We are going to pivot to be a fully regulated financial institution going forward,” CZ said in a live stream on July 27. “We want to be licensed everywhere … From now on, we’re going to be a financial institution.”