The world’s largest cryptocurrency exchange, Binance, may still be facing dark days despite being sued by both the SEC and the CFTC in the United States. John Reed Stark, who served as the head of the Internet Enforcement Office at the SEC and spent more than 20 years at the institution, suggested in his latest assessment on his personal Twitter account that another lawsuit could be brought against Binance.
Former SEC official points to the possibility of another lawsuit for Binance
According to former SEC official John Reed Stark, the world’s largest cryptocurrency exchange Binance may face additional legal issues as another lawsuit could be filed against them. Stark argues that the current SEC and CFTC lawsuits against Binance do not adequately address money laundering issues, implying that the Department of Justice (DOJ) may be involved in a potential lawsuit. Stark stated that the case could be filed now and may be kept under seal. He noted that both SEC and CFTC lawsuits did not adequately address money laundering issues, and it is highly likely that this issue will be left to the DOJ.
Stark also shared some key details from both the SEC and CFTC case files. According to a document, Binance CEO CZ instructed his employees dealing with VIP customers to explain how to circumvent the compliance rules. CZ also suggested not leaving any text messages and using the Signal program for conversations. According to CFTC documents, Zhao has developed a special system for Binance’s VIP customers to avoid compliance. Zhao also told his employees to engage in conversations with customers through programs that would not leave any evidence.
Exchange responds to SEC allegations for the first time
On the other hand, Binance US responded to the allegations made by the SEC, stating that customer funds are kept separate from company funds. Subsequently, he denied allegations of fraud and market manipulation. Binance’s US platform, Binance US, has officially responded to allegations made by the US Securities and Exchange Commission (SEC). The exchange addressed allegations of fraud, market manipulation, misrepresentation to investors and failure to separate client assets from company funds, brought up by the SEC.
“The company holds its clients’ fiat currencies in separate accounts with banking partners, separate from any institutional funds,” said lawyers representing BAM Trading, the official company of Binance US, in response to allegations that client funds were mixed with funds controlled by Zhao. In his defence, the company admitted that Zhao had a BAM Trading bank account, but stated that he had no signing authority on the account. Binance US described the SEC’s move as harsh.
Moreover, the exchange argued that the SEC should prove that the crypto assets mentioned in the lawsuit are indeed “investment contracts”. The SEC classified 12 cryptocurrencies as such in the lawsuit filed against Binance, including BNB, BUSD, SOL, ADA, MATIC, FIL, ATOM, SAND, MANA, ALGO, AXS and COTI.
Borsa strengthens its legal team
Meanwhile, Binance is strengthening its legal team in response to a lawsuit filed by the Securities and Exchange Commission (SEC). The exchange is actively seeking world-class attorneys to defend itself against the SEC. In this context, Binance has listed an important person who previously held senior positions in the SEC. The person in question is Geourge Canellos, the former chief of the Major Crimes Division of the US Attorney’s Office for the Southern District of New York.
In his petition, Canellos stated that he is an attorney for BAM Trading Services and BAM Management US Holdings. This petition is generally known as a standard document submitted to the court to ensure that a lawyer has the right to formally represent the parties at a hearing. In this case, it appears that Canellos has applied to represent the defendants in the lawsuit brought by the SEC against Binance Holdings Limited, BAM Trading Services, BAM Management US Holdings and CEO Changpeng Zhao.
