Brian Brooks plots ambitious path to take Binance.US out of Asian crypto giant's shadow

Binance.US — the American exchange platform affiliated with Asian crypto giant Binance — dropped a bombshell last week when it announced former Comptroller of the Officer of the Currency Brian Brooks was joining as its new chief executive. 

The move took many by surprise. It wasn't lost on market observers that Brooks — a former banking regulator — is set to join a firm closely associated with an exchange that's reportedly being probed by the Commodities Futures Trading Commission. Binance.US licenses Binance’s technology and both firms share Changpeng “CZ” Zhao as a founder. 

There is also the now ambiguous status of the firm's founding chief executive Catherine Coley. Coley has not responded to inquiries from The Block regarding her departure. 

In an interview with The Block, Brooks made it clear that Binance.US isn't an American proxy for the much-larger off-shore venue — as an October report from Forbes, based on a leaked internal document, suggested.

Launched in 2019, Binance.US entered the US market at the same time that many other Asian exchanges, such as Bitflyer and Huobi, set up entities in the country. Unlike Binance, Binance.US does not offer certain products, for instance derivatives and high leverage, that require approval from U.S. regulators.

Since Binance provides its technology to Binance.US, it stands to benefit from the success of the US entity. Still, Brooks said that success is contingent on the two firms being totally separate. 

"I am confident in that," Brooks said. "Just because there is one guy who is a majority shareholder in both companies doesn't mean all the value will roll up into one company. It is a successful stand-alone business,” referring to CZ. 

Brooks — a native of Colorado — represented large financial firms as an attorney prior to serving as chief legal officer of OneWest Bank, the bank known for being run by former Treasury Secretary Steven Mnuchin, and for its questionable foreclosure practices.

In 2018, Brooks joined Coinbase where he played a large role in establishing industry standards for listing new coins as well as building out the exchange's internal compliance teams. At the OCC, Brooks became a darling of the crypto industry thanks to a series of policy moves at the agency that gave the green light for banks to engage in certain crypto activities.

Binance.US has ambitions to become as large as Coinbase. In recent months, Binance.US has managed to climb the exchange leaderboard in the United States, clocking in more volumes this month than rivals Gemini and Bittrex. 

With its $28.39 billion worth of exchange-traded volume in April, Binance.US's market is now more than one-fourth the size of Coinbase’s, as per data from The Block's dashboard.  

But it still has a lot of hurdles to overcome, according to sources close to the firm.

One source, who spoke under the condition of anonymity out of fear of reprisal, said that the firm's management team has struggled to clinch all of the necessary licenses to open up shop in certain states. Binance.US is currently not available in Connecticut, Hawaii, Idaho, Louisiana, New York, Texas, and Vermont, as per a customer support page. 

Binance.US had previously said it would cover the entire United States by the end of 2020. 

Brooks is determined to get those licenses. 

"My priority is doing what is necessary to get what needs to be done on licenses," he said. This is "low hanging fruit" for Binance.US, he said, adding that if the firm "just added those states and nothing else, the business would probably double."

Another source said the firm has struggled to keep up with competitors on the product side. 

"It hasn't kept up with the industry, trends, and consumer demand," the person said. 

Customer service headaches were put on full display in April when a prominent Crypto Twitter personality, Ledger Status, fired off a tweet about the firm's verification process. 

"So does anyone know how long verification takes on @BinanceUS? I have a significant position there it won’t let me touch but the verification is pending," the account wrote. Over 75 people responded to the tweet—many with customer service complaints of their own.

"Customer support is job number one," Brooks told The Block. "This has to be an immediate issue." He chalked the problem up to typical growing pains of a consumer business.

"I ran a customer support function at a bank once upon a time," he said. "You don't have the right triage process in place and are chasing down the same complaint that came through various channels." 

Brooks said his team would address the customer service issue within his first 30 days. “I've seen it fixed, it is fixable, and we will fix it."

He added the firm has brought on a new head of customer service and will build out its support staff. 

Looking to the future, Brooks plans to expand Binance.US' product offering to cover a wide range of financial service products. He said that while most of the largest crypto firms in the space have limited themselves to "one or two offerings," — typically custody and trading — he plans to turn Binance.US into a "financial supermarket." 

That metaphorical supermarket will be stocked with an integrated lending platform, a payments platform built on Binance's stablecoin BUSD, and even derivatives, Brooks said. That’s a product that would require approval from the CFTC and has yet to be offered by a retail crypto exchange in the US. 

"Derivatives are a great opportunity," he said. "It's something in Binance.com's DNA and it is part of our roadmap."

In order to achieve these lofty goals, Brooks said that during the next 18 months the firm will need to increase its headcount by 10 times from its current 100-person staff. 

"I'm not joining a fully-baked company, this is a chance for this team to scale and build the culture we want to build," Brooks remarked.