Noah Perlman, the newly hired global chief compliance officer at Binance Holdings Ltd., said the regulatory environment for the cryptocurrency industry has made his job one of the “most challenging opportunities in compliance.”
Mr. Perlman, speaking at a crypto industry conference on Tuesday, said it has been difficult to navigate the often opaque rules governing the crypto industry without being on the wrong side of the regulators.
One reason, said Mr. Perlman, who joined Binance in January after a monthslong search by the exchange, is the “regulation by enforcement” approach taken in the U.S. He contrasted the process in crypto with working at traditional financial institutions, where compliance is difficult but there are rulebooks and track records to guide a compliance officer’s work.
When regulators disagree with the decisions that traditional financial institutions make in regulatory gray areas, as long as the decisions are made on a good-faith basis and are in line with the principles required, “the expectations is that, they might tell you ‘all right, well, just don’t do it that way anymore,’” he said, “but at least you have something to stand on.”
“Very difficult here in crypto, where you try to apply the same mind-set, and all of a sudden, it’s not a discussion, it’s a Wells notice or worse,” Mr. Perlman said at the Links NYC conference hosted by blockchain analytics firm Chainalysis Inc.
A Wells notice refers to a letter sent by the U.S. Securities and Exchange Commission recommending that the commission bring an enforcement action against a company or individual.
Before joining Binance earlier this year, Mr. Perlman was chief operating officer at rival exchange Gemini Trust Co. for more than two years. Before joining Gemini, the crypto firm founded in 2014 by Cameron Winklevoss and Tyler Winklevoss, he worked for 13 years at Morgan Stanley, including as its global head of financial crimes overseeing the bank’s anti-money-laundering, sanctions and anticorruption compliance programs. Mr. Perlman earlier in his career served as a division counsel for the U.S. Drug Enforcement Administration’s New York division and as a federal prosecutor at the Eastern District of New York in Brooklyn.
Mr. Perlman’s remarks come as Binance faces a civil lawsuit from the Commodity Futures Trading Commission, announced late last month. The U.S. derivatives markets regulator alleged Binance operated illegally in the U.S. and violated rules designed to prevent illicit financial activity. The CFTC also sued the exchange’s founder and Chief Executive Changpeng Zhao and its former chief compliance officer, Samuel Lim.
The CFTC alleges that Mr. Lim, Binance’s compliance chief between 2018 and 2022, undermined Binance’s compliance program and conducted activities to evade rules designed to prevent illicit financial activity, The Wall Street Journal previously reported.
Source: Wall Street Journal
