Binance.US hires former head of California “mini-CFPB”

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Dive brief:

  • Binance.US hired a second major regulator, Manny Alvarez, to join the cryptocurrency exchange on July 22 as its chief executive, the company said. Tuesday in a blog post.
  • In the role, Alvarez – who served until last month as California Commissioner Financial Protection and Innovation Department – oversee the risk, compliance and legal function of Binance.US, the company said on Tuesday. Alvarez to report to CEO of Binance.US Brian brooks, who has been Acting Chief of the Office of the Comptroller of the Currency since May 2020 until January and joined the exchange on May 1.
  • “Compliance is the key to building trust with both our customers and our regulators, which is why we are hiring recognized leaders in the field such as Manny,” Brooks said in Tuesday’s post. “It is this rare brilliant regulatory mind with a keen sense of law and compliance who also brings a strong tech and Silicon Valley perspective.”

Dive overview:

Alvarez led California’s chief financial regulator at a time of transition. The state created a Financial Protection and Innovation Department (DFPI) last year out of its current business oversight department; broadened the regulator’s scope to include fintechs, payday lenders and debt collectors; and enabled him to bring both administrative and civil actions.

Prior to joining the then Department of Business Oversight in 2019, Alvarez was General Counsel and Compliance Officer at Fintech Affirm and, prior to that, was Executing Counsel at the Consumer Financial Protection Bureau (CFPB).

After announcing that he was leaving his California post, effective June 18, Alvarez told the american banker, “When I consider the reopening of the world, maybe now is a good time to take a break and enjoy some time. He said he had accomplished what he set out to do at DFPI despite being launched just a few months ago.

Binance.US, meanwhile, has added 110 employees to its regulatory, legal, compliance and customer support teams – nearly doubling its headcount – since Brooks joined the company, the company said. Brooks has been careful to demarcate Binance.US from the world’s largest crypto exchange, which he says simply shares a common founder.

This founder, Changpeng Zhao, published a letter tuesday on Binance’s blog, expressing that the exchange hasn’t “always been successful, but we are learning and improving every day.”

“We hope to clarify and reiterate our commitment to work with regulators,” Zhao wrote, adding that the company “hires more talent” and “puts in place more systems and processes to protect our users.”

“Compliance is a journey, especially in new areas like crypto,” Zhao wrote. “We know we’re at the tipping point, along with the entire industry.”

The letter comes as the exchange resolves regulatory issues in a number of countries. UK Financial Conduct Authority (FCA) ordered the exchange stop all regulated activities in the country. UK clients, however, can still use the exchange’s non-UK operations for activities that the FCA does not directly regulate, such as buying and selling cryptocurrency holdings. But Barclays, for its part, has prevented its UK-based clients from using credit and debit cards to make payments to Binance. (Update: Santander told UK clients that starting Thursday, it will stop payments from their accounts to Binance but continue to let them withdraw money from the exchange, the Financial Time reported.)

The exchange told European customers in an email that from Wednesday they would be temporarily unable to deposit funds through the Single Euro Payments Area due to “events beyond our control,” according to the Financial Time.

Thailand’s Securities and Exchange Commission filed a criminal complaint last week alleging Binance was operating in the country without authorization.

On the British front, a source says CoinDesk that Binance wants to hire “a British version of Brian Brooks” – in other words, a former regulator or government official to bolster the stock exchange’s credibility in its commitment to comply. The exchange announced wednesday he had hired former eToro executive Jonathan Farnell as chief compliance officer for his European team. Farnell started in may, according to his LinkedIn profile.

Brooks, meanwhile, said he plans to hire hundreds of people over the next six to nine months, and Binance.US could go public within the next four years. according to Bloomberg.

“Calling on someone like Manny, who was the regulator responsible for protecting over 40 million consumers, shows that… we are not going to be on the defensive when it comes to compliance and consumer protection,” he said. Brooks told the press service. “We’re going to be at the forefront, so we’re going to hire the best talent, the most experienced people to handle these roles for us because we agree they’re super important.”

Alvarez, for his part, said he was joining the company at an “important time in [its] growth trajectory. “

“Throughout my career, I have worked to level the playing field for Americans seeking financial freedom, defending and promoting fairness, transparency, education and innovation,” said he declared. “I look forward to bringing that same relentless focus to the digital asset industry. “

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