According to information from The Wall Street Journal, the SEC has announced efforts to seek evidence related to Binance.US and its founder CZ’s use of a “back door” – controlling users’ assets – similar to FTX.
Specifically, the agency has stated that it will continue litigation against Binance in court, despite the exchange’s agreement with the Department of Justice and the CFTC, as well as Judge Faruqui’s ruling on CZ’s charges.
Earlier, in June 2023, the SEC sued Binance, Binance.US, and CEO Changpeng Zhao with allegations of federal securities law violations and misconduct in managing customer assets for personal gain, such as transferring them to CZ’s Swiss-based company Sigma Chain.
Currently, the SEC’s main argument is that Binance has the ability to control the assets of Binance.US users, leading to actions similar to what happened at FTX.
Matthew Laroche, Binance.US’s lawyer, also revealed that the company had incurred significant legal costs from the lawsuit. Assets deposited on Binance.US have decreased by nearly 90%, and the number of users on the platform has halved since the SEC filed the lawsuit.
In the end, Judge Faruqui has requested Binance.US and the SEC to resolve the dispute and update him by December 15, 2023.
However, Binance reached a settlement with the U.S. Department of Justice (DOJ) and the Commodity Futures Trading Commission (CFTC) last week, accepting a record $4.3 billion fine. CEO Changpeng Zhao also resigned, paying a $50 million fine, being banned from holding a management position at Binance for 3 years, and facing the risk of imprisonment in the U.S.
It’s worth noting that both the DOJ and CFTC did not mention allegations of embezzlement or improper use of customer funds by Binance – something that both Changpeng Zhao and the new CEO, Richard Teng, emphasized in subsequent media statements. Binance claims that this sets them apart from FTX and believes that their finances remain stable, even as users withdraw their entire balances from the platform.
Although the SEC has yet to provide any evidence of wrongdoing by Binance.US, they continue to insist that the exchange is “underwater.”
It can be seen that the SEC, under the leadership of Chairman Gary Gensler in 2023, has taken numerous actions to regulate the cryptocurrency industry, accusing many individuals and organizations of misconduct. The agency has also repeatedly delayed proposals for Bitcoin Spot ETFs from major Wall Street players, citing concerns about fraud and manipulation in the cryptocurrency industry.