Key takeaways:
- The US SEC is still searching for proof that Binance US had a backdoor via which it could have been able to control customer funds similarly to FTX.
- The exchange was accused of transferring client funds at will, including to Zhao’s controlled Sigma Chain in Switzerland.
In line with a Wall Street report published on November 27, the United States Securities and Exchange Commission (SEC) is still searching for proof that Binance US had a backdoor via which it could have been able to control customer funds similarly to FTX.
The exchange was accused of selling unregistered securities by the SEC in a lawsuit filed in June. Changpeng Zhao, the founder of Binance, and Binance were also accused of participating in a sophisticated conspiracy involving fraud, conflicts of interest, a willful disregard for the law, and a lack of disclosure.
The exchange was accused of transferring client funds at will, including to Zhao’s controlled Sigma Chain in Switzerland, according to one of the accusations.
Attorneys for Binance.US allegedly claimed during a federal court hearing on November 27 that there is no proof the securities regulator has seen asset misuse, and they requested that US Magistrate Judge Zia Faruqui put the securities regulator’s inquiry into possible fraud on hold.
Attorney for Binance in the US, Matthew Laroche, also brought up the litigation’s soaring expenses, pointing out that since the SEC filed the action, Binance’s US assets have dropped by over 90% and its user base has decreased by half.
The request was made as part of a $4.3 billion settlement with the US Justice Department, Treasury Department, and Commodities Futures Trading Commission, in which Binance and Zhao consented to enter guilty pleas for violating US anti-money laundering rules.
But none of the SEC’s fraud-related allegations from its June lawsuit with the Bitcoin exchange were included in the US Justice Department’s case.
In a motion filed on November 27 in the US District Court for the Western District of Washington at Seattle, Judge Richard Jones postponed a magistrate judge’s decision to permit CZ to return to the United Arab Emirates, where he has family. The judge declared that CZ would not be allowed to depart the nation until a ruling on a motion for US authorities to review was rendered.
