The U.S. government’s strong regulatory model on the crypto industry is changing the industry’s ecology. As the “chicken” in the “killing the chicken to scare the monkey” policy, Binance, the world’s largest cryptocurrency exchange, revealed that the company will increase its investment in compliance.
Last year, the U.S. Securities and Exchange Commission sued Binance and its founder, CZ, alleging improper handling of customer funds, misleading investors and regulators, and violating securities rules. Binance subsequently appealed to dismiss the case, but a U.S. judge ruled in June that most of the litigation would proceed.
CZ pleaded guilty and resigned as CEO of Binance in November last year. Richard Teng subsequently took over as CEO of Binance. In April this year, CZ was sentenced to four months in prison by a U.S. district court.
This is also a typical example of the large-scale actions taken by US regulators against the crypto industry, and Binance's countermeasure is to comply with the regulation. Teng said on Wednesday that it will recruit 1,000 employees this year, most of whom will be assigned to the compliance department. By the end of this year, Binance will have 700 compliance employees, an increase of 200 from the current level.
The importance of compliance
Teng, who has served as a senior executive at the Monetary Authority of Singapore and the Singapore Stock Exchange, and as CEO of the regulator of the Abu Dhabi International Market, said he had been a regulator all his life and knew how important it was to communicate with government agencies.
He revealed that Binance has received more and more requests from global law enforcement agencies, reaching 63,000 this year, exceeding the 58,000 requests for the whole of last year. This is the direct reason why Binance pays more and more attention to compliance.
He also said that Binance's compliance spending has climbed to more than $200 million from $158 million two years ago, and will increase further.
The company is facing compliance monitoring from the U.S. Department of Justice and the U.S. Treasury Department's Financial Crimes Enforcement Network, and the arranged monitors have already begun their work, but for Binance, this is just the beginning. These monitors will closely monitor Binance's financial statements and transaction traces.
After Teng took office, Binance also reformed the way it cooperates with major brokers, tightened the requirements for listing new digital tokens, and spun off its venture capital arm.
However, despite the regulatory headwinds, Binance's business remains profitable and it is considering expansion plans in Dubai, Abu Dhabi and other cities. Teng also pointed out that Binance will also recruit customer service staff this year to adapt to the rebound of the crypto market after the 2022 bear market.
