US Court Summons Binance CEO in Response to SEC Complaint

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Key takeaways:

  • The US District Court has issued a summons to Binance CEO Changpeng Zhao amid claims of violations of the securities laws and improper management of customer funds.
  • The summons states that Malta, an island country in the Mediterranean Sea, is where CZ currently resides.

Just two days after the Securities and Exchange Commission (SEC) officially sued the exchange for alleged unregistered securities operations, the Washington DC court filed a summons for Binance CEO Changpeng Zhao on June 7.

The summons did not appear to have been marked as served, and the SEC and Binance did not immediately respond to a request for information. Zhao is legally compelled to reply to the summons after it has been delivered, even though he won’t necessarily have to show up in person.

The document states that when service is made, Binance and its CEO will have 21 days to reply. He will be subject to judgment by default for the relief sought in the complaint if he doesn’t respond.

Two days ago, shocking news hit the whole digital asset sector. In particular, the US regulator brought legal action against two of the biggest cryptocurrency exchanges on the market for breaking US securities regulations. The regulator then asserted that the most recent cryptocurrency exchange on the planet had mishandled customer funds.

Despite the legal difficulty, CZ didn’t seem phased by the summons and treated it as a formality in the case. Although Binance has not yet responded to the summons, it has stated that it will contest the SEC’s complaint, which claims that US securities laws were broken and that user assets were mismanaged. Additionally, Coinbase made a similar complaint, except it omitted claims of improper handling of user funds. 

On June 5, the SEC filed a lawsuit against Binance, alleging 13 violations. The majority of these violations allegedly involved the exchange’s internal sales of goods and services, its cryptocurrency staking program, and the company’s alleged failure to properly register both its primary and US arms as exchanges. 

Binance rejects any claims that its exchange has ever “siphoned consumers’ funds” or “collateralized borrowings.” The business asserts that it never made “large sponsorships” of media and entertainment companies or “large donations” to political politicians.

Additionally, Binance US has had its assets frozen by the SEC under a restraining order pending court approval. However, the global exchange is unaffected by this order.

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