As Binance fights its legal battles with the United States Securities and Exchange Commission (SEC) along with other similar issues with regulators worldwide, a significant personality from the exchange has presented views. Notably, a low-profile but highly influential senior executive at Binance has taken a shot at the regulator.
Ye Hi, who is reported to have earned a fortune as one of the company’s early shareholders and is rumoured to have children with Binance CEO Changpeng Zhao (CZ), appeared in an interview recently. Sources say she has much to lose as the regulatory onslaught deepens and causes an existential crisis for largest crypto exchange. Behind the scenes, Yi He’s clout is vast across an exchange that accounts for around half of all crypto trading volume, with a global workforce of about 8,000.
Among other responsibilities, she oversees the multibillion-dollar venture capital fund Binance Labs, which has backed more than 200 projects. She also leads fueling the growth of the Binance-initiated BNB Chain, whose native token has recently been dubbed an unregistered security by the SEC and helps supervise the institutional client business as well as acquisitions.
In a series of recent interviews with Bloomberg including one which was in Dubai right before the SEC slammed the charges, He has expressed her views over the ongoing lawsuits. Throughout these interviews, there were two primary messages, she intended to convey. She said that first of all, Binance and regulators may not be so far apart and second, the company is far from the villain critics make it out to be. She explained that the regulators are not trying to monitor or observe the exchange closely before making harsh decisions. He added:
If they really took the time to understand our industry, they would see that if Binance isn’t compliant, then practically no other global trading platform or offshore company is.
In the context of the latest allegations by the regulators that hint at the shattering of the freewheeling crypto era, Yi He struck a more conciliatory tone in a follow-up WhatsApp message. She says that Binance respects the regulator and their overall intention even if it comes at cost of crushing developments in the crypto sector. Quoting He:
We respect the attitude of regulators, whether it supports or opposes the development of crypto. I understand that the overall intention of regulation is good in order to protect investors.
Notably, while Binance leaders have been strongly criticising the regulator and countering the claims, it is not the only exchange to come under the wrath of the regulatory crackdown. The SEC has targeted major crypto firms including Kraken, Paxos and Coinbase.
However, allegations against Binance are notable in their scope and severity. The SEC filed a 136-pages long lawsuit against the exchange alleging it on commingling users’ funds and money-laundering. To this, He said that Binance offers more transparency than its detractors allege and has been cooperating with US regulators, something lawmakers in Washington have disputed as well. She added:
The trend of regulations is inevitable globally. It’s not something you can solve by shouting ‘fight’ a couple of times.
Reportedly, Yi He didn’t engage or refute the claims from the SEC that firms used so-called wash trading to pump up volumes and that client funds have been commingled and liberally transferred in and out of various accounts. Meanwhile, she emphasised that unlike the allegations against FTX, Binance has not touched user funds for its own purposes or used its native BNB token as collateral for loans.
The battle between the SEC and Binance has been intensifying and the regulator also called a summon to the CEO. Sources reveal that the exchange is known for having no formal headquarters, thus making it theoretically harder to sue or regulate. It’s also been criticized for being shrouded in opacity, from its governance structure to its handling of client assets.
Additionally, Binance has not only been dealing with SEC’s lawsuit but was also hit by a lawsuit from the Commodities and Futures Trading Commission (CFTC) in March. It had sued the company on some overlapping charges, such as serving U.S.-based customers from its international platform.
While Binance and its top executives have often tried to blame the regulator and criticise it for its antagonistic approach, the exchange is also facing increasing troubles. In the past weeks, Binance US delisted several trading pairs and announced halting USD deposits and withdrawals. On top of it, the leaked chats and the SEC’s motion to freeze assets which was eventually dismissed panicked investor leading to huge inflows. Simultaneously, Binance is dealing with authorities worldwide including France, Brazil, Netherlands over charges of money-laundering and operating illegally.