Major cryptocurrency exchange Binance had “gaps” in regulatory compliance in the first few years after it launched in 2017, the company’s chief strategy officer (CSO) Patrick Hillmann told the Wall Street Journal in an interview.
Highlander revealed that Binance made mistakes during the implementation of its security measures, such as the Know-Your-Customer (KYC) protocol and anti-money laundering (AML) rules designed to combat money laundering activities.
Binance admits loopholes in regulatory compliance
The CSO also revealed that the flaws, which have since been addressed as Binance improved its security protocols and workforce, occurred two years after the company’s establishment as it pushed for global expansion.
Hillmann blamed the shortcomings on understaffing, as the exchange’s small team was very thin and focused on compliance, cybersecurity and expansion at the time.
It is a tremendous burden. As a result, there were some gaps in our compliance system in the first two years,” he said.
The Binance executive also noted that while the exchange was initially short on staff, the firm has closed the gap by expanding its compliance team.
The firm improved its staff with more than 750 employees in the last two years. Hillmann said Binance it also recently hired a new chief compliance officer, Noah Perlman, a former chief operating officer at rival exchange Gemini.
Binance in talks with US regulators
Hillmann also revealed that Binance is currently in discussions with United States watchdogs for a possible deal to halt existing regulatory investigations into its trading operations in the country.
The US Department of Justice (DOJ), the Internal Revenue Service (IRS), the Securities and Exchange Commission (SEC), and the Commodity Futures Trading Commission (CFTC) have been investigating Binance, its business structure and financial reserves in the past. few years.
Financial watchdogs, particularly the CFTC, began doing research Binance in March 2021 to determine whether the company violated US laws by offering its products and services to US residents without proper authorization.
Later that year, the commodities regulator opened another investigation into the company over insider trading allegations sparked by a separate Justice Department investigation in collaboration with the IRS.
Hillmann: The authorities are very cooperative
Hillmann said that Binance would not disclose its discussions with the regulatorsbut the exchange may be forced to pay a fine for penalties or even pay a higher price for remediation.
We just don’t know. That is for regulators to decide. It is largely for the benefit of our users. We just want to put it behind us,” he said.
The CSO further stated that the company is “very confident and feels very good about where these discussions are going,” noting that authorities are “very cooperative.”
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