SEC still looking for FTX-style fraud on Binance.US: Report
According to a report published by the Wall Street Journal on November 27, the United States Securities and Exchange Commission is still looking for evidence that Binance.US had a backdoor to manage customer assets similar to FTX.
In June, the SEC filed a lawsuit against Binance and Binance.US, the exchange was involved in the sale of unregistered securities and accused Binance and its founder of participating in a complex conspiracy involving fraud, conflicts of interest, lack of disclosure and willful disregard of the law.
One of the charges is that the exchange sent clients' assets to Switzerland to the Sigma chain, which is controlled by Zhao, to exchange clients' assets at will.
In a November 27 federal court hearing, Binance.US's lawyers said there was no evidence the securities regulator's assets were misused and asked U.S. Magistrate Judge Zia Faruqi to stop the investigation into possible fraud by the securities regulator.
Binance.US attorney Matthew Larochème cited the ballooning cost of the lawsuit, noting that Binance.US assets fell by 90% and the user base halved after the SEC filed the suit.
The request comes as Binance and CZ agreed last week to plead guilty to violating US anti-money laundering laws as part of a $4.3 billion settlement with the US Department of Justice, Treasury and Commodity Futures Trading Commission (CFTC).
However, the US Department of Justice's case against the cryptocurrency exchange in June did not include claims related to SEC fraud.
Binance.US has asked the SEC to resolve the dispute
Judge Faruqi, who is presiding over the Binance and SEC case, reportedly said the guilty plea would prevent Binance.US and CZ from misappropriating client assets.
“At some point, I have to take a leap of faith and say enough is enough,” Faruqi told SEC attorneys.
Faruqui asked Binance.US and the SEC to resolve the dispute and update it by December 15.
Related: Binance CEO CZ's fall is the ‘end of an era' – Charles Hoskinson
Meanwhile, CZ is now awaiting a court review to determine if he can leave the US and return two weeks before his sentencing date.
The judge ordered that CZ not be allowed to travel to the United Arab Emirates until the court rules on the review request from the US government.
BREAKING NEWS: The judge ordered the condition of CZ's return to the UAE to remain in place (ie CZ must remain in the continental US for the time being).
(See updated filing below with links to all relevant DOJ/Binance/CZ court filings)
Yesterday, I predicted… pic.twitter.com/I6MmHkINv2
— John Reed Stark (@JohnReedStark) November 27, 2023
CZ could face up to 18 months in prison under federal sentencing guidelines.
Magazine: US law enforcement agencies are turning up the heat on crypto-related crimes.
