Binance CEO Changpeng Zhao (CZ) recently sent a memo to employees warning them about the potential consequences of their internal communication, after the U.S. Securities and Exchange Commission (SEC) leaked screenshotted chat logs between the company’s employees. CZ reminded his staff that anything they say could end up in court or on the internet one day. This cautionary communication follows an incident during which private conversations between Binance’s former compliance lead “Sam Lim” and Head of Business Development “Alvin” were used as evidence in an SEC lawsuit against the firm.
The chat logs revealed that these employees were discussing tactics such as “dumping” their BNB tokens before their value decreased, and confessed to “operating an unlicensed securities exchange” – activities that align with the allegations made by the SEC against Binance. Furthermore, the SEC exposed Sam Lim explaining how a client could use a “special arrangement” to trade on Binance’s international exchange while being officially registered on the Binance US platform. CZ is described as being in agreement with this arrangement.
Although the leaked chat logs have caused significant damage to Binance’s reputation, CZ dismissed them as “complaints” made by two individuals. He also expressed his belief that it was ludicrous for the SEC to use these chat logs as evidence in their lawsuit, but assured his team that the company’s lawyers would handle the situation. Despite not being aware of the conversations in question, CZ expects that the SEC will likely demand access to the exchange’s chat history as part of their investigation.
Additionally, the CEO addressed employees who may feel unsatisfied with their jobs at Binance, suggesting that they should seriously consider their career options. It seems that the ongoing SEC lawsuit and the negative publicity surrounding it have taken a toll on both the company and its workforce.
As recently as Thursday, CZ denied allegations made by the SEC that his company Merit Peak had received billions of dollars in customer funds redirected from Binance and Binance US. He emphasized that user funds are accounted for and have never left the Binance US platform, except when withdrawn by users themselves.
These recent events highlight the potential pitfalls and problems that can arise when internal communications between employees are not properly regulated or monitored. As the crypto industry continues to grapple with regulatory challenges, more attention must be paid to maintaining transparency and professionalism at every level of operations.