Binance Hires Former FCA, FINRA Regulators In Latest Compliance Personnel Shake-Up

April 27, 2022
Binance, the world’s largest cryptocurrency exchange by volume, has hired two former regulators from the UK and the US as part of a new compliance charm offensive.

Binance, the world’s largest cryptocurrency exchange by volume, has hired two former regulators from the UK and the US as part of a new compliance charm offensive.

In a statement released on April 21, Binance announced that it has hired Steven McWhirter as its director of regulatory policy and Seth Levy as its head of market surveillance.

McWhirter spent more than nine years at the UK Financial Conduct Authority (FCA), and 12 years at the UK Gambling Commission.

His most recent role prior to Binance was as a strategy and engagement manager at the FCA’s data, technology and innovation division, where he played a role in formulating the UK’s crypto guidance.

He has also managed the secretariat of the Global Financial Innovation Network (GFIN), a group of more than 75 regulators and observers worldwide.

As director of regulatory policy, Binance said McWhirter will work with industry leaders, policymakers and regulators globally to develop a sustainable compliance framework for the company.

“My efforts will support Binance by ensuring that the regulatory global compliance is enhanced in tandem with crypto and blockchain innovation,” said McWhirter.

“Leading Binance’s regulatory policy team will allow me to leverage my experience as a former conduct regulator to create a sustainable crypto ecosystem with consumer protection and market integrity at its heart.”

Binance’s other new hire, Seth Levy, will serve as head of market surveillance. Levy is a 16-year veteran of the US Financial Industry Regulatory Authority (FINRA), but he is joining Binance from US hedge fund Citadel and its market making arm Citadel Securities.

In his FINRA role, Levy was responsible for leading a team tasked with designing and conducting surveillance of US equities markets, investigating misconduct and examining compliance with rules and regulations.

At Binance, Levy said he will oversee efforts to build and implement a surveillance infrastructure that is tailored to the risks associated with digital asset trading.

“Our goal is to ensure that Binance users are protected from any form of nefarious activity or bad actors”, including “fraud and manipulation”, he said.

“We will work to further proactively engage regulators and other market participants to strengthen market integrity and user protection, and enhance public confidence in the crypto market.”

Too big to hide: Binance’s new compliance orientation

McWhirter and Levy are the latest additions to a growing number of regulators who have made the switch from civil service to cryptocurrency exchange.

In August 2021, Binance hired Greg Monahan as a global money laundering reporting officer (GMLRO). At the time of Monahan’s hiring, Binance said it had grown the size of its international compliance team and advisory board six times over since 2020.

Other notable regulatory appointments include: Jonathan Farnell, formerly of eToro; ex-US Senator Max Baucus; and Rick McDonell and Josée Nadeau, both previous executives at the Financial Action Task Force (FATF).

Binance has also recruited from industry, including the hire last month of Zane Wong as director of know your customer (KYC) compliance. Wong joined Binance from Goldman Sachs, but had also previously worked for J.P. Morgan and Bank of America Merrill Lynch.

All of these hires can be seen through the lens of Binance’s new compliance strategy, which appears to be one of finally accepting that its platform has grown too big to continue its sometimes elusive approach to regulation.

Binance said as much in a company statement in September 2021: “At Binance, we recognise what it means to be the industry leader versus simply being the largest player in the industry.

“We recognise the myriad responsibilities that are inherent in the former.

“In particular, we are committed to continue working with regulators across the globe to weed out bad actors and blaze a trail for the industry to grow and innovate in a responsible manner.”

Earlier that month, Binance founder and CEO Changpeng Zhao also told the South China Morning Post that because the market cap of crypto had grown too big for regulators to ignore — at the time it was around $2.4trn — Binance would work to become a licensed financial institution with a centralised headquarters.

“As the largest player in the industry, we need to prepare ourselves for the shift. We are making changes to make it easier to work with regulators,” he said.

A Binance statement from March this year struck a similar tone: “Some in the industry might argue that pushing for the need for regulation on a global scale goes against the ethos of the cryptocurrency and blockchain space — because the core of the industry lies with decentralisation.

“However, here at Binance, we welcome the increasing involvement and actions from regulatory bodies and governments in the crypto space.

“Since the beginning, we have always emphasised a user-focused model, and our mission continues to be protecting users while encouraging innovation.”

All roads lead to Dubai?

In October 2021, Binance suspended its platform in Singapore following an order from the Monetary Authority of Singapore (MAS) to discontinue its unlicensed payments services.

Binance then spent two months seeking a cryptocurrency exchange licence in Singapore, only to withdraw its application in December.

CEO Zhao then moved from Singapore to Dubai, where this month Binance received in-principle approval (IPA) for a Financial Services Permission (FSP) from the Abu Dhabi Global Market (ADGM), and where Binance has also announced plans to hire more than 100 new staff, with rumours of a new headquarters.

As reported by VIXIO, Binance missed out on the honour of becoming the first crypto business to receive a full financial licence from the ADGM, after being beaten to it earlier this week by Kraken, a much smaller rival.

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