T

he United States Securities and Exchange Commission (SEC) is intensifying its investigation into Binance.US, the American counterpart of Binance, over allegations of backdoor control of customer assets. According to a report by the Wall Street Journal, the SEC is examining the structure of Binance.US, which is said to resemble FTX.

CZ Binance Wearing Binance Hoodie and Smiling
Changpeng Zhao (CZ) Binance

SEC Lawsuit Alleges Fraud and Lack of Disclosure

The SEC filed a lawsuit against Binance and its founder, Changpeng Zhao (CZ), accusing them of engaging in fraudulent activities, conflicts of interest, lack of disclosure, and willful disregard for the law. One particular allegation asserts that Binance had the ability to redirect customer assets, including funds under the control of CZ.

During a recent court hearing, Binance.US attorneys argued that the SEC lacks evidence to support its claim of asset misuse. They called for U.S. Magistrate Judge Zia Faruqui to consider halting the SEC's investigation into potential fraud. Binance.US attorney Matthew Laroche highlighted the significant financial impact of the lawsuit on the exchange, with assets plummeting nearly 90% and the user base halving since the SEC initiated legal action.

Binance and CZ's Guilty Plea in Anti-Money Laundering Lawsuit

It is important to note that the SEC's investigation is separate from the recent guilty plea by Binance and CZ in a $4.3 billion settlement with the U.S. Justice Department, Treasury, and Commodity Futures Trading Commission (CFTC) for violating anti-money laundering laws. This settlement does not address the allegations made by the SEC.

Judge Faruqui, who is presiding over the Binance and SEC case, expressed skepticism about the misappropriation of customer assets, taking into account the guilty pleas in the anti-money laundering lawsuit. He encouraged both parties to work towards resolving the dispute and set a deadline of December 15 for an update on their progress.

Binance and The Sec Logo
Binance and The Sec Logo

CZ's Travel Restrictions and Pending Sentencing

Meanwhile, CZ awaits a court review to determine if he can leave the United States and return two weeks before his scheduled sentencing date in February. The judge's order currently restricts CZ from traveling to the United Arab Emirates, his primary base, until a court rules on a motion for review from the U.S. government.

The SEC's investigation into Binance.US continues, with a focus on alleged backdoor control of customer assets. Binance.US attorneys are challenging the SEC's claims, citing a lack of evidence. The recent guilty plea by Binance and CZ in an anti-money laundering lawsuit is separate from the SEC's allegations. Judge Faruqui urges both parties to seek a resolution, while CZ awaits a court review on his travel restrictions. The outcome of these legal proceedings will have significant implications for the future of Binance.US and CZ.

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