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Binance Bulks Up on Lawyers Amid Crypto Market Meltdown (1)

May 16, 2022, 9:30 AMUpdated: May 16, 2022, 3:31 PM

Binance Holdings Ltd., the world’s largest cryptocurrency exchange by trading volume, is looking to hire more than 30 lawyers as the industry is in flux and its billionaire founder’s fortune shrinks.

Most of the in-house legal and compliance counsel positions are listed on an online jobs board for Binance, which operates a remote workforce. The openings are predominantly regional data privacy and regulatory counsel roles. More than a dozen Binance compliance and government affairs positions are also posted online.

The digital asset industry saw major upheaval last week following the collapse of the TerraUSD stablecoin. Crypto assets lost an estimated $270 billion in market value, as noted by Bloomberg News.

Binance founder and Chief Executive Officer Chanpeng Zhao’s net worth has fallen from $96 billion in January to roughly $11.6 billion this month. Zhao, a Chinese businessman, started Binance in 2017.

The company’s decision to beef up its legal and compliance ranks tracks an industry-wide effort to do so as the decentralized finance space matures, according to Binance spokeswoman Jessica Jung.

“We have been working to staff up our regulatory, compliance, and security teams for months now,” she said. “We are working with regulators to achieve our mutual objective; to help the crypto industry grow responsibly and provide even greater protections for consumers.”

Binance.US, a separate entity serving US customers owned by BAM Trading Services Inc., said in a statement it “welcomes thoughtful regulation that increases clarity and trust and allows American innovation and leadership on crypto to flourish.”

The company noted it has ramped up hiring efforts to further its goal of becoming the “most trusted and compliant crypto brand in the US.” A jobs webpage for Binance.US lists an opening for an employment counsel position.

“Over the past year, Binance.US has doubled its headcount and made strategic investments and hires across legal, risk and compliance, and customer service,” the company said.

Revolving Door

Binance and Binance.US have been busy bolstering their ranks of former government lawyers. The companies face numerous regulatory inquiries in a variety of jurisdictions, mostly involving allegations of money laundering and tax evasion, as well as litigation from traders who had their accounts frozen.

Binance last week announced its addition of Joshua Eaton as its first deputy general counsel. Eaton, who spent the past three years as a deputy US attorney in San Francisco, will oversee the organization’s legal affairs supporting global compliance, investigations, and law enforcement coordination activities, according to Binance.

Eaton will help Binance in its “efforts to protect users and manage risks,” Hon Cheung Ng, the company’s general counsel, said in a statement. Ng, a former senior attorney at Latham & Watkins, joined the company in late 2020 after spending nearly a half-dozen years in-house at Uber Technologies Inc.

Binance.US made waves last year by naming a new CEO in decentralized finance advocate Brian Brooks. The former chief legal officer at rival cryptocurrency exchange Coinbase Global Inc. also served as acting head of the Office of the Comptroller of the Currency. Brooks recruited Manuel Alvarez, an attorney and former commissioner of California’s Department of Financial Protection and Innovation, to be chief administrative officer for Binance.US.

Both lawyers were gone within months, reportedly caught up in a dispute over the company’s strategic direction between Brooks and Binance’s Zhao.

The departures of Alvarez and Brooks—the latter became CEO in November of blockchain technology company Bitfury Group Ltd.—were followed by other exits, including that of Binance.US general counsel Christopher Robins and fellow in-house lawyers Katherine Snow and Matthew Sumner.

Robins, a former Buckley associate, resurfaced in March as general counsel for Goldfinch Technology Co. The decentralized credit protocol startup raised $25 million earlier this year from venture capital firm Andreessen Horowitz.

Binance.US tapped Norman Reed, a former legal chief at decentralized payments company Ripple Labs Inc., to replace Robins as interim general counsel in October. By December, Reed was permanently appointed to the position. He didn’t respond to a request for comment about whether he works with Ng, Binance’s global legal chief.

Regulatory Blitz

Despite the turnover, Binance and Binance.US appear to have adhered to a public pledge by Zhao to increase the size of their legal and compliance staffs as cryptocurrency companies cope with an uncertain regulatory environment.

In January, Binance.US brought on its first chief risk officer and deputy general counsel in Sidney Majalya, a former chief compliance officer and group counsel for global government affairs at Intel Corp. The company the next month hired compliance chief Tammy Weinrib, a former vice president at Société Générale SA.

Binance.US added another former prosecutor to its ranks last month in litigation counsel James Petrila, a former senior associate at Hogan Lovells who spent the past three years as a trial attorney for the Justice Department. Petrila is the son of Jim Petrila, a former deputy general counsel for the National Security Council who also spent 25 years in the Central Intelligence Agency’s Office of the General Counsel.

Binance has within the last month announced its addition of two former non-lawyer regulators in Steven McWhirter and Seth Levy, both of whom previously worked for the U.K.’s Financial Conduct Authority and the Financial Industry Regulatory Authority, respectively. Binance still faces restrictions in Zhao’s native China.

The company also reportedly hired Stéphanie Cabossioras, deputy general counsel for France’s Autorité des Marchés Financiers, to fill an in-house role. The French government gave its approval this month for Binance to do business in the country.

Binance has appeared in only a handful of lawsuits filed in US federal courts, per Bloomberg Law data. Paul, Weiss, Rifkind, Wharton & Garrison handled two matters for Binance in 2020, while New York’s Morvillo Abramowitz Grand Iason & Anello entered appearances on behalf of Binance in another pair of cases filed this year.

(Adds comment from Binance.US is paragraphs seven through nine.)

To contact the reporter on this story: Brian Baxter in New York at bbaxter@bloomberglaw.com

To contact the editors responsible for this story: Chris Opfer at copfer@bloomberglaw.com; John Hughes at jhughes@bloombergindustry.com