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Former SEC Official: Binance Gearing Up for Criminal Prosecution

Mon, 06/12/2023 - 17:13
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Alex Dovbnya
Binance, the world's premier cryptocurrency exchange, and its CEO, Changpeng Zhao, have enlisted the help of a high-profile lawyer, seemingly in anticipation of a criminal lawsuit
Former SEC Official: Binance Gearing Up for Criminal Prosecution
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Binance, the world's number one cryptocurrency exchange, and its CEO Changpeng Zhao are bolstering their legal defenses in what appears to be preparation for a criminal prosecution, according to a tweet from former SEC official John Reed Stark.

In a significant development, Binance and Zhao have added George Canellos, a former chief of the Major Crimes Unit in the U.S. Attorney's Office for the Southern District of New York and ex-head of the SEC's New York office, to their legal team. Stark underscored the importance of this addition, noting Canellos' unique experience as both an SEC and a Department of Justice prosecutor.

This substantial legal maneuver comes on the heels of a rigorous lawsuit launched against Binance and Zhao by the Securities and Exchange Commission (SEC).

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The charges levied by the regulator include operation of unregistered securities trading platforms, unauthorized crypto asset securities sales, and purported fraud. According to the SEC, Binance knowingly sidestepped regulatory oversight, jeopardizing investor assets in the pursuit of its own enrichment.

The main point of the SEC's case is the claim that Binance and its CEO, Zhao, secretly ran their U.S. business. This supposedly allowed rich American customers to dodge rules that were meant to limit their access, effectively avoiding U.S. laws. On top of this, Binance and Zhao are accused of illegally selling their own digital currencies like BNB and Binance USD (BUSD), as well as other crypto-related products. The SEC also claims that Binance and Zhao set up two companies, BAM Management and BAM Trading, in order to dodge U.S. federal financial laws.

Stark's tweet suggests that the hiring of high-profile defense attorneys like Canellos indicates that Binance is bracing for a significant legal battle.

With his tongue-in-cheek reference to the combined powers of superheroes Ironman, Captain America, and the Hulk being potentially inadequate to rescue Binance from its current legal predicament, Stark paints a picture of a high-stakes battle ahead.

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About the author

Alex Dovbnya (aka AlexMorris) is a cryptocurrency expert, trader and journalist with extensive experience of covering everything related to the burgeoning industry — from price analysis to Blockchain disruption. Alex authored more than 1,000 stories for U.Today, CryptoComes and other fintech media outlets. He’s particularly interested in regulatory trends around the globe that are shaping the future of digital assets, can be contacted at