SEC Intensifies Probe into Binance US Amid DOJ Charges Against Changpeng Zhao
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The race for evidence in the SEC’s hunt for potential fraud at Binance US has kicked into high gear following the Department of Justice’s bombshell charges against the platform and its former CEO, Changpeng Zhao. Zhao’s admission of guilt has sent shockwaves through this legal saga, tilting the scales in a significant twist. Do we see SBF having a gala time with CZ in jail? DOJ is working hard to sentence CZ with maximum jail time.
Here’s what the new report suggests that could change the fate of Binance
The SEC’s lawsuit against Binance US, ongoing since June, gives a spine-chilling FTX vibe from the alleged fraudulent activities threatening client funds. With Binance’s recent settlement with the DOJ, the SEC is doubling its case, seeking proof akin to their actions with FTX. They’re specifically eyeing any signs of potential foul play within the crypto giant, particularly the alleged granting of backdoor control over assets to CZ, mirroring incidents with Sam Bankman-Fried.
Diverted Assets: Binance’s Swiss, FTX Connection?
WSJ reports have surfaced, hinting at diverted customer assets, including funds seemingly under Zhao’s command, to Sigma Chain in Switzerland. In a heated federal court hearing, Binance.US’s legal team fiercely contested the SEC’s investigation, citing a lack of evidence on asset misuse. They’ve rallied for a halt to the regulator’s pursuit of potential fraud. While the SEC’s lawsuit against Binance has teased at possible illegal securities exchanges like FTX, concrete proof remains elusive. But the SEC seems hopeful that the DOJ’s investigations and charges will add weight to their case.
WSJ: The SEC is still looking for evidence to find out whether Binance and CZ have backdoors to control assets stored on the Binance US platform, and is worried that Binance may embezzle U.S. crypto assets using FTX-style fraud. https://t.co/nEB8DNKOmx
— Wu Blockchain (@WuBlockchain) November 28, 2023
Binance.US attorney Matthew Laroche sounded alarm bells on the lawsuit’s overshooting costs and the exchange’s dwindling assets and user base since the SEC’s lawsuit filing. Binance forked over $4.3 billion in their settlement with the US government. Whereas CZ’s exit as CEO paved the way for Richard Teng to step into the chief role.
Judge’s Skepticism: Doubts Cast in Binance, SEC Clash, What Next?
Given the guilty pleas, Judge Zia Faruqui, presiding over the Binance and SEC showdown, seemed skeptical about potential asset misappropriation. Faruqui urged a swift resolution and mandated an update by December 15.
Meanwhile, CZ hangs in limbo, waiting for the green light on travel permissions before his February sentencing. The judge’s travel restrictions bar CZ from his UAE base until a decision is made on the US government’s review motion. A potential 18-month prison stint looms large, following federal sentencing guidelines.
Filed under: Bitcoin - @ November 28, 2023 5:14 am