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- The SEC keeps investigating Binance for possible control of customer assets, while Binance.US disputes the allegations in court.
- Binance and its founder pleaded guilty to AML violations in a $4.3 billion settlement, but the SEC’s fraud claims remain unresolved.
The United States Securities and Exchange Commission (SEC) continues its investigation into Binance.US, focusing on potential backdoors that may have allowed the exchange to control customer assets, mirroring allegations against FTX.
In a lawsuit filed in June, the SEC accused Binance and its founder, Changpeng Zhao, of participating in a complex conspiracy involving unregistered securities sales, fraud, conflicts of interest, and a lack of disclosure. One key allegation suggests that the exchange diverted customer assets, including funds channeled to Sigma Chain in Switzerland under Zhao’s control.
During a recent federal court hearing on November 27, according to WSJ, Binance.US’s legal team challenged the SEC’s assertions, emphasizing the absence of concrete evidence supporting the misuse of assets. Attorneys argued for the suspension of the SEC’s investigation into potential fraud.
Binance.US attorney Matthew Laroche also highlighted the financial toll of the lawsuit, pointing out that the exchange’s assets had plummeted nearly 90 percent, and its user base had halved since the SEC initiated legal proceedings.
Binance and Changpeng Zhao reached a plea agreement to settle charges related to U.S. Anti-Money Laundering laws, amounting to a $4.3 billion settlement with the U.S. Justice Department, Treasury Department, and the Commodity Futures Trading Commission. It’s worth noting that this deal did not include the SEC’s fraud-related claims from the June lawsuit.
Judge Urges Resolution and Sets Deadline
U.S. Magistrate Judge Zia Faruqui, presiding over the case, expressed skepticism regarding the misappropriation of customer assets. Given the guilty pleas reached in the Anti-Money Laundering case, Judge Faruqui suggested it was less likely that Binance.US and Changpeng Zhao had misused customer assets. The judge called on both parties to seek a resolution and set a December 15 deadline for an update.
Changpeng Zhao, also known as CZ, is awaiting a court review to determine whether he can leave the United States and return two weeks before his scheduled sentencing date in February. However, he remains restricted from traveling to the United Arab Emirates, his primary base, until the court rules on a motion for review from the U.S. government.
Breaking News: Judge Orders That The Condition Permitting CZ To Return To The UAE Pending Sentencing Is STAYED (i.e. CZ Must Remain in the Continental U.S. For Now)
(See Updated Compendium Below With Links To All Relevant DOJ/Binance/CZ Court Filings)
Yesterday, I predicted… pic.twitter.com/I6MmHkINv2
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New Leadership and Strategic Shift
Following Changpeng Zhao’s guilty plea and departure, Richard Teng has assumed the CEO role. Under Teng’s leadership, there is a noticeable shift in Binance’s approach, with a strong emphasis on regulatory compliance. This change marks a departure from CZ’s leadership style, as Teng expresses a desire to collaborate with regulators worldwide and build a reputation centered on trust.
Coinbase’s Contrasting Fortunes
While Binance navigates its legal challenges, rival cryptocurrency exchange Coinbase has seen its stock reach new heights. On November 27, 2023, Coinbase’s stock price hit approximately $121, marking its highest point since May 22, 2022. This contrasting legal situation between the two major exchanges adds a layer of intrigue to the cryptocurrency market dynamics. As Binance grapples with regulatory hurdles, Coinbase appears to enjoy a positive momentum in the stock market.