Note that the topic of current SEC Chairman Gary Gensler’s possible employment of cryptocurrency companies is of interest, as he is now hurting the development of the digital asset niche. For example, in mid-February, the regulator’s actions led to the termination of the BUSD staplecoin from Paxos and Binance. Sources say the token may not have been fully secured at the time, which led to the problems.

The cryptocurrency exchange Kraken, which was forced to shut down stacking for US citizens on its platform and on top of that paid a $30 million fine, was also a victim of the regulator’s activities.

This blow, however, has not stopped the crypto exchange giant. As it became known the day before, Kraken’s management is planning to create its own bank. The information was voiced by the general counsel of the trading platform on the air of The Scoop podcast. Here’s his quote.

Kraken Bank is indeed getting ready to launch, and very soon.

Accordingly, the development of cryptocurrency companies continues even within the US. However, due to the danger of getting fined by regulators, the pace of such development is clearly slower than it could be.

What’s happening with the cryptocurrency exchange Binance

Generally, Binance began its journey in China, but the company later moved to Japan. Despite this, the company has long lacked a physical headquarters, for which Binance CEO Changpen Zhao has often been criticized by regulators. Although as The Wall Street Journal’s sources point out, a fifth of the exchange’s customers were based in the US, where government attitudes to digital assets have become increasingly radical year after year.

Worried about the threat of harassment, Binance began planning a format to protect it from the encroachment of US agencies. The strategy was to create a US-only platform, Binance.US, which would license the technology and the Binance brand, but otherwise appear to be completely independent of the main exchange. This would have protected the bulk of Binance’s business from the scrutiny of US regulators by excluding US users from it.

It is worth noting that other cryptocurrency industry players have pursued a similar strategy. However, the U.S. has stricter financial regulation, so business is conducted differently in this country. A case in point is the bankrupt trading platform FTX, which also had an exclusively US-based subsidiary called FTX.US. The latter ended up being bankrupt as well.

How to put the idea of Binance.US into practice? According to Decrypt’s sources, the exchange’s team had a lot of ideas in the beginning of the journey. In particular, they wanted to hire Gary Gensler, who was still teaching at the Massachusetts Institute of Technology at the time, as an advisor. This was almost two years before he became head of the US Securities and Exchange Commission.

Gensler was a professor at MIT's international business school in Cambridge. And his lectures have dealt with blockchain, Bitcoin and other digital assets, among other things. Here is one of Gary's talks, where he talks about decentralised distributed ledger technology.

According to journalists, CEO Changpen Zhao himself was involved in Gensler’s hiring process. He also noted in a group chat with Binance executives that “Gensler rejected his offer, although he was happy to share his strategies regarding licensing in the US.”

Another Binance employee then noted that Gensler “would likely take the chair of the regulator if the Democrats win the 2020 election.” And so it happened – after the election of President Joe Biden, Professor Gary Gensler became a member of his team and was eventually appointed and confirmed by the Senate to chair the Commission in April 2021. He was given a term of five years – until 2026.

Now some experts agree that Gensler's term may end sooner. Still, he slept through 2022, when the collapse of dubious cryptocurrency companies really led to losses for investors. Gary also interacted with FTX founder Sam Bankman-Fried, who ended up being a fraud. Naturally, this was enough of a blow to Gensler's reputation.

One of Binance’s main concerns was avoiding prosecution by US regulators when attracting US customers. Management has repeatedly claimed that Binance.US – a company set up in 2019 as BAM Trading Services Inc. in Delaware – was simply a company that licenses Binance’s technology and brand. However, according to documents, this company was run by Zhao himself.

In other words, there are too many connections between Binance’s core business and the US arm of the trading platform, although all of them are denied by the executives of the entire ecosystem. A clear indication of this: about 18 percent of Binance.com’s traffic is generated by visitors to the site from the US.

In another example, in the team’s Telegram chat, Binance.US’s first CEO Catherine Kohli demanded that individual unit representatives report directly to Changpen Zhao or then CFO Wei Zhou, even though they were not formally in charge of the US division of the exchange.

Will this become a problem for US regulators? Most likely, Binance will still get a dose of negativity in its direction – and especially from the US Securities and Exchange Commission. As we’ve already noted, the SEC has been actively handing out bans in the crypto industry lately: it recently banned staking for US clients of the Kraken exchange, as well as the issuance of the BUSD stabelcoin.


It seems that in an alternate universe, Gary Gensler could still benefit the cryptocurrency industry. And as you can tell from the professor's lecture videos, he understands the topic of digital assets. However, things have turned out differently, and now blockchain platforms from the US have to operate in an environment of regulatory uncertainty. One would like to believe it will eventually end.