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Binance Response to Senators’ Inquiry Omits Key Financial Information

Binance Response to Senators’ Inquiry Omits Key Financial Information
Binance Chief Strategy Officer Patrick Hillman avoided revealing key financial information about Binance and Binance.US in response to a recent letter from U.S. lawmakers.

Hillman’s 14-page response said that despite Binance having weak compliance in its earlier years, it had invested heavily in personnel to ensure it complies with robust Know-Your-Customer and Anti-Money Laundering policies.

Binance Executive Reportedly Avoids Money Matters

Binance has 750 compliance personnel, including regulators and law enforcement. It tapped former Gemini COO as its compliance officer, Hillman said.

In addition, he emphasized that Binance and its U.S. affiliate Binance.US are separate entities, and the two companies were less closely coupled than previously reported in the media.

Earlier this month, three U.S. senators, including Elizabeth Warren from Massachusetts, accused Binance of being a playground for illegal transactions.

The letter , co-penned by Roger Van Holland of Maryland and Roger Marshall from Kansas, asked Binance, Binance.US, and its CEO Changpeng ‘CZ’ Zhao for the balance sheets of all Binance-related companies since 2017. It also asked for anti-money laundering policies and evidence that Binance’s CEO instructed employees to lower KYC standards. The senators set a March 16, 2023, deadline for Binance to respond.

An anonymous source told Bloomberg that Binance had separately sent the required financial information to U.S. regulators. 

CZ Continues to Distance Exchange From FTX

After the collapse of rival exchange FTX in November 2022, Binance has tried to distinguish itself as an ethical business.

It created a recovery fund to help struggling crypto firms. It is reportedly working on a new proof-of-reserves report that confirms changes in users’ balances without revealing their identity.

The exchange also mints so-called B-Tokens, which allow it to use customer deposits on a single blockchain. These tokens are supposed to be backed up by collateral of the actual tokens deposited. 

Recently, however, Binance admitted that collateral was being held in the same wallets as corporate funds, causing customer deposits to be overcollateralized. This error prompted the exchange only to mint B-Tokens when they were backed up by the required collateral.

On March 17, 2023, Changpeng Zhao said that crypto firms should not lend customer funds to earn money and that they should charge a transparent fee for services.

a few more crazy ideas: 2. don't lend out customer money to make money. let VCs do that. 3. no revenue? charge a transparent fee for your services, like facilitating transactions(tx). 5. tx cost too high? use blockchain tech to lower your costs. Keep business simple. 
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