Binance’s General Counsel Faces Some of the Toughest Challenges in Crypto

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(Bloomberg) — Binance’s General Counsel Eleanor Hughes has a lot to keep her busy, ranging from the giant crypto exchange’s testy dispute with Nigerian officials to strict monitoring by US authorities as part of a landmark plea deal.

That plea agreement with the Justice Department and US regulators led to a $4.3 billion corporate penalty and the jailing of co-founder Changpeng “CZ” Zhao for failures that let criminals and terror groups use the exchange.

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Reflecting on the panoply of challenges, Hughes described her role at the world’s biggest digital-asset trading venue as among “the most interesting jobs in the legal profession,” one that throws up fresh issues and questions daily.

“We believe that Binance has overcome some really significant challenges in the last six months and we’ve shown ourselves to be a very resilient business despite everything that’s happened,” she said in an interview.

US Oversight

Hughes — who has been at Binance since 2021 and today leads a team of 80 lawyers — worked under billionaire Zhao until he quit as chief executive as part of November’s US settlement and handed the reins to Richard Teng.

The exchange now faces years of compliance monitoring by the Justice Department and the US Treasury’s Financial Crimes Enforcement Network. Teng said this month that the appointed monitors — Forensic Risk Alliance and Sullivan & Cromwell — have already begun the task.

Binance has developed an in-house team led by Sally Molloy, a former deputy chief of the Justice Department’s Fraud Section, to liaise with the monitors, according to Hughes. Molloy helped to oversee post-resolution compliance obligations such as monitorships in that prior role, a spokesperson said.

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The fracas with Nigeria flared in February, when authorities in Africa’s most-populous nation detained two Binance employees, including US citizen Tigran Gambaryan, the company’s head of financial crime compliance. 

Lawmaker Angst

The colleague, Nadeem Anjarwalla, escaped but Gambaryan remains in prison in Abuja even though some charges have been dropped. US lawmakers have accused Nigeria of holding him hostage, a claim the government there rejects. 

Binance’s problems in the West African country had already been simmering prior to the detention, after authorities blocked cryptocurrency channels amid a clampdown on speculation against the naira.

“One of the allegations against us there is that we’re not registered,” said Hughes. “There are no crypto exchanges registered there. And we reached out on two occasions with letters to the Nigerian Securities and Exchange Commission and got no response.”

All this comes as Teng attempts to remold the business. During his tenure, the company has adjusted the way Binance works with prime brokers, tightened requirements for listing new digital tokens and spun off its venture arm. But the company has yet to formally designate a global headquarters or release a fully audited set of accounts.

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Audit ‘Delay’

“It’s obviously very difficult for crypto businesses as a whole to engage with third-party auditors, because a lot of them have taken the decision that they won’t engage with any digital-asset or crypto firms,” Hughes said. “That is causing us a little bit of delay.”

Binance’s headcount currently stands at upwards of 5,000 staff, a spokesperson said. Customer assets on the platform have expanded by $42 billion in 2024 as crypto markets rallied, Teng said in a recent interview.

Helping that growth is the headway Binance is making in some markets where it had previously been stymied by regulatory disputes. 

Recently in India, for instance, the exchange registered with the Financial Intelligence Unit as a step toward resuming operations there. The FIU this week said it had imposed a penalty of 188.2 million rupees ($2.2 million) on Binance for providing cryptoasset-related services without complying with the country’s anti-money laundering rules. 

In Thailand, the Gulf Binance Co. platform — a joint venture with billionaire Sarath Ratanavadi’s Gulf Energy Development Pcl — went live this year after getting the necessary permits. Back in 2021, the Thai securities regulator filed a criminal complaint against Binance for operating a digital-asset business without a license.

“That’s something that we are looking to do in a number of different markets — clear those historic issues,” Hughes said, adding that Binance aims to work with regulators “even in very difficult jurisdictions.”  

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