Former Binance.US CEOs reveal the relationship between Binance.US and Binance

On June 5, 2023, the U.S. Securities and Exchange Commission (SEC) accused Binance and Changpeng Zhao of violating multiple U.S. laws. Some of the main charges include that Binance.US is an unregistered exchange that illegally solicited U.S. investors to buy, sell and trade crypto asset securities; Binance.US and Binance.com have a close relationship with Changpeng Zhao.

The U.S. SEC's charging documents include excerpts from testimony to regulators from two former Binance.US CEOs, Catherine Coley and Brian Brooks, one of whom has remained silent since resigning in 2021. The documents include their testimonies on leading Binance.US and the main obstacles they faced in their work.

The testimony also touched on the influence of Binance Holdings (which operates the binance.com international platform) on Binance.US and its operations, as well as the sharing of technology and resources between the two.

Binance.US’s First CEO

Catherine Coley was the first CEO of Binance.US, serving from 2019 to 2021 and overseeing the company’s initial launch in the United States.

Her sudden departure and subsequent silence left many speculating about what happened during her tenure as CEO and why she left. Excerpts from her deposition in SEC filings shed light on her experience.

Coley told the SEC that Binance.US relied heavily on Binance.com's resources and employees in its early days, and the platform's code was written entirely by engineers based in Shanghai. She said that because much of the code was written in Chinese, this ultimately became a "major pain point" in making Binance.US independent from its international entity, Binance.com. She added that despite having bilingual skills, it was challenging to recruit American and Western engineers to work on the code.

As a result, she said she focused on areas where she could quickly achieve independence, such as customer support.

The excerpt does not mention the reason for her departure or her current whereabouts.

Matching Engine

Coley also confirmed that during her tenure at Binance.US, the company used the same matching engine as Binance.com, and that she did not recall Binance.US signing a service level agreement before opening accounts for U.S. users in September 2019.

Brooks told the SEC that Binance.US has a team of about 50 engineers in Shanghai. He said they were originally part of Binance.com but were "spun off" into Binance.US in 2019. He understands that they operate in China under an entity called "Boran," which is actually Binance.US's unit in China.

Brooks said that Binance.US uses a licensed matching engine and Binance.com does not directly control the platform through technology.

CZ is an economically relevant counterparty

Brooks became CEO after Coley's departure and served in the position for about four months. He resigned in August 2021, citing "differences in strategic direction."

Brooks said he quickly realized he was not the CEO after joining the company, as many of the changes he proposed to address Binance.US issues were suddenly “denied” after months of work.

“At a certain point, it became clear to me that CZ was the CEO of BAM Trading, not me,” he said.

Brooks also said that Binance.US received an initial $10 million in funding from CZ when it launched because the company couldn’t launch without funding. He likened it to Hewlett & Packard funding its own garage in the early days, but according to Brooks, the existence of these funds was a “problem.”

He said:

“This shows that the company is actually heavily dependent on CZ, who is not only a controlling person but also an economically relevant counterparty.”