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Binance Exec Admits To Past ‘Gaps’ In Compliance

 |  February 16, 2023

A Binance executive says the cryptocurrency firm had compliance “gaps” it has since closed.

Patrick Hillman, the company’s chief strategy officer, told the Wall Street Journal Wednesday (Feb. 16) that Binance’s staff was spread thin as it expanded internationally. 

“It’s a tremendous burden,” Hillmann said. “As a result, there were some gaps in our compliance system in the first two years.”

He also says he expects the world’s largest crypto company is “working with regulators to figure out what are the remediations we have to go through now to make amends for that.”

Hillman said those amends could mean “a fine, could be more … We just don’t know. That is for regulators to decide.”

“This nascent industry has grown quickly, and Binance has shown its commitment to security and compliance through large investments in our team as well as the tools and technology we use to detect and deter illicit activity,” a Binance spokesperson said in December.

However, the WSJ report cites unnamed sources who say the company is also under investigation by the Commodity Futures Trading Commission (CTFC).

Related:  NY Regulator Orders Binance Stablecoin Backer Paxos To Freeze Issuing Tokens

Binance and the crypto sector have been under scrutiny since last year’s collapse of the FTX exchange, a landmark for the industry in which Binance played a key role.

When FTX’s troubles appeared in November, Binance initially made an acquisition offer to save its competitor. But CEO Changpeng Zhao called off that deal days later after the company’s due diligence uncovered the alleged commingling of funds at FTX. 

Since then, Binance has faced challenges to regain public trust. Instead of an audit, Binance released a “proof of reserves” last year showing it had enough bitcoin reserves to cover its liabilities.

Last week, Leon Foong, who heads Binance’s Asia-Pacific operations, said a full audit could be a long way off, telling Bloomberg News that while the company wants to hire an auditor, major accounting firms are still getting a handle on the crypto sector.

“It’ll take a longer time,” Foong said. “It shows you the limitations of the more traditional industries because there is a learning curve. Number one, it’s not their core competence. And number two, obviously there’s a lot of scrutiny if they get it wrong.”

Critics have pointed out that other crypto companies have been able to hire big accounting firms to handle their audits, such as Coinbase, which has worked with “Big 4” auditor Deloitte.