Quick take:
- Binance has published a statement accusing the SEC of taking a unilateral decision amid ongoing investigations.
- The US capital markets watchdog is accusing Binance of misusing customer funds and running an illegal crypto exchange in the US.
- Binance claims it cooperated with investigations and worked hard to answer their questions and address their concerns.
Binance has hit back at the Securities and Exchange Commission (SEC) for filing a lawsuit against its US subsidiary. The US capital markets regulator claims Binance operated an illegal crypto exchange in the country.
The SEC also says the leading crypto exchange company of mishandling customer funds, an accusation that Binance refuted strongly in a statement published on its website.
“All user assets on Binance and Binance affiliate platforms, including Binance.US, are safe and secure, and we will vigorously defend against any allegations to the contrary,” the statement reads.
Binance accuses the SEC of abandoning negotiations after seemingly agreeing on a settlement to resolve their investigations.
“Most recently, we have engaged in extensive good-faith discussions to reach a negotiated settlement to resolve their investigations. But despite our efforts, with its complaint today, the SEC abandoned that process and instead chose to act unilaterally and litigate.”
In the SEC’s lawsuit, the regulator says Binance mixed billions of dollars of customer funds and send them secretly to a company controlled by Binance founder Chengpeng Zhao (CZ).
“We allege that Zhao and the Binance entities not only knew the rules of the road, but they also consciously chose to evade them and put their customers and investors at risk,” said Gurbir Grewal, director of the SEC’s enforcement division.
The regulator further claims Binance operated an illegal crypto exchange platform in the country by allowing high-level US customers to trade on Binance.com.
“Zhao and Binance in reality subverted their own controls to secretly allow high-value US customers to continue trading on the Binance.com platform,” a statement by the SEC reads, adding that despite claiming to create a separate entity, Binance.US for the US market, Zhao and Binance.com secretly controlled the Binance.US’ operations behind the scenes.
In its defence, Binance claims that instead of the SEC helping to establish an effective regulatory framework through transparency, collaboration and thoughtful agency engagement, the regulator has chosen to abandon the process, thus undermining America’s role as the global hub of innovation.
Based on recent evidence, CZ and Binance appear to have been working hard to get into the SEC’s good books.
In a series of announcements made on Monday, the company revealed its summer internship program had received more than 8,000 applications. The program offers 23 successful applicants a 10-week training in the immersive Advanced Management Program (AMP) as part of an effort to nurture crypto talent in North America.
The company also announced the appointment of Rachel Conlan, the former OKX head of brand and partnerships as its vice president of global marketing. The move was seen as an attempt by the world’s largest crypto exchange company to revamp its declining market share. Binance is on a mission to onboard the one billion users to its ecosystem.
But the most interesting news came from the company’s internal appointments, with former Abu Dabhi regulator Richard Teng taking an expanded role of overseeing regional markets outside the US.
According to reports, the appointment is seen as a step towards replacing Binance founder Chengpeng Zhao as CEO. CZ has been reportedly looking to reduce its stake in Binance.US to try and appease US regulators.
But Teng, who will now be overseeing Binance operations in Asia, Europe, the Middle East and North Africa played down the idea that he is being groomed to replace CZ calling it “just expanded responsibility to help [Zhao] look at certain things.”
“To speculate on such things would be premature,” Teng, told CoinDesk. “Let me just stress we have a very strong management team in place and many strong leaders looking after different parts of business. I’m just happy to be part of that and to try and support the company’s agenda and aspirations.”
If some of these appointments and announcements were made to try to build some bridges with the SEC, then the US capital markets watchdog appears to have decided against reaching across.
“It seems based on these developments that the SEC’s goal here was never to protect investors; if that were truly the case, the Staff would have thoughtfully engaged with us on the facts and in our efforts to demonstrate the safety and security of the Binance.US platform. The SEC’s real intent here, instead, appears to be to make headlines,” Binance wrote following the SEC’s decision to sue the crypto exchange company.
However, CZ and Binance are not giving up just yet. The company maintains that it will continue working with regulators in the US and other parts of the world as it “remains committed to productive engagement to ensure the next generation of cryptocurrency regulation fosters innovation while implementing and ensuring important consumer protections.”
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