Counterattack: CZ’s internal letter reveals two exchanges criticized by Gensler

Wu Shuo learned that CZ published an internal letter in response to the SEC’s allegations. The full text is as follows:

Dear Binance colleagues,

As we go through these difficult times, I want to share with you two tweets.

The first one:

(The content includes former Binance compliance officer Sam Lin saying his company “could not be clean”, not optimistic about BNB, providing convenience for whales and US users to avoid KYC, etc. Many Binance employees provided a large number of internal chat records under the SEC’s request.)

As you can see, although this is just two people “private” roaring five years ago, it has caused great damage to our (and their) reputation. I want to remind everyone:

Binance is cooperating with investigators. They usually ask for our chat records first. Anything you say will one day/will appear in court (or on the Internet).

For reference only, we do not check employee chat records. This is actually the first time I (CZ) have seen this with my own eyes.

The SEC’s use of it in the poster is outrageous, but we will let the lawyers handle it.

More importantly, if you are not satisfied with working at Binance (or any company), you should talk to your manager and perhaps seriously consider your career choices. Don’t waste your energy and life on something you don’t like, because you won’t be good at it anyway. If you stay, please make sure you love your work and our mission: financial freedom. We need people who are completely dedicated to this mission, because we have to overcome “some” challenges to achieve this goal.

The second one:

Read the comments below the tweet. Although this is a simple tweet, you will see that our users support our efforts to “continue to build”. I want to convey the message I have said many times before: in difficult times, let us keep a low profile and continue to make products that people use.

Although we may still see other chat records from dissatisfied employees, or other things we (or I) have accidentally said in the past, they will also find that we continue to adhere to high moral standards, and most importantly, we always do our best to protect our users. We will never compromise on this point. Even if some people deliberately choose to ignore this, the truth will prevail.

Why? Because we have our values, and each other and our users are on our side. CZ (end of text)

SEC Chairman Gensler explained his actions in detail in a recent interview:


He said: We have flexible rules for the disclosures required in registration statements–SK Regulations and SX Regulations–as well as registration exemptions, including Regulations A or D, so that issuers of crypto securities need to register their investment contract’s offer and sale with the SEC or satisfy an exemption. We have also provided guidance for years on what constitutes or doesn’t constitute a security in the crypto asset market, including the DAO report from 2017 and the staff’s framework for analyzing digital asset investment contracts from 2019. Over 100 commission orders, settlement actions, and court decisions have also made it clear when tokens are being sold and when they’re a security, including actions we’ve taken against Telegram, LBRY, and Kik.

Gensler cited the recent action taken by the SEC against Coinbase and obliquely refuted the company’s public argument that it didn’t know how to comply with securities laws: When crypto asset market participants say on Twitter or on TV that they weren’t given fair notice, beware. They may well have made a deliberate economic decision to take enforcement risk as a cost of doing business.

Gensler noted that his agency had obtained internal communications indicating that Binance executives were intentionally breaking the law. He quoted some of the contents in his speech: According to our lawsuit against Binance, Binance insiders were aware that they needed to start preparing everything for subpoenas and Wells notices related to their exchange token BNB, as a result of the SEC’s action against Kik.

Gensler also noted that the SEC believes that Binance and Binance.US redistributed billions of dollars of customer assets into investment vehicles owned by CEO Zhao Changpeng, which parallels similar allegations against the collapsed cryptocurrency exchange FTX and its founder, Sam Bankman-Fried; and accused Binance of lying to customers about where their assets were held and actively manipulating the market to counter them.

CZ refuted this accusation.

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