The judicial crisis facing BINANCE is not over even though it agreed to pay a multimillion-dollar fine to the United States. The Securities and Exchange Commission of the North American country introduced an additional allegation against the largest bitcoin (BTC) and cryptocurrency exchange, putting more pressure on its complaint against the renowned company.
Despite the agreement reached between Binance, the Department of Justice and other regulatory bodies, the SEC keeps its sights on the exchange. That is why this week he presented a series of new incriminating facts against Binance and its founder, Changpeng Zhao, which were taken directly from the plea agreement.
Last November, CZ, now the former CEO of Binance, reached a plea deal with the United States government that led, among other things, to the immediate departure of the Chinese-Canadian businessman from the company, who was fined more than USD 50 million.
This also led to the payment of a federal fine of USD 4.3 billion that was imposed against the largest bitcoin and cryptoasset exchange on the market. The multimillion-dollar fine against Binance is among the largest ever imposed by the Department of Justice on a financial institution. And it is, in turn, the highest monetary penance that has been imposed by the US government against a company in the Bitcoin ecosystem.
According to lawyer John Reed Stark, with its new move, the SEC wants the judge handling the litigation against Binance to declare as true some punishable facts presented as evidence in the complaint against the company. These incriminating facts could strengthen the securities regulator's lawsuit against Binance , as well as the arguments against the exchange's motion seeking to dismiss the SEC action, explains Reed Stark.
In detail, the SEC presented as an incriminating fact that Binance and Zhao acknowledged in the plea agreement that they had taken “deliberate” steps to subvert US laws. Among these measures is the action of having allowed clients from that country to operate on the platform without prior registration with the authorities.
Likewise, the SEC presented as a punishable act that Binance and CZ rejected their arguments that the securities regulator's actions involved non-prosecutable extraterritorial conduct. Allegations that were undermined by the plea agreement signed by Zhao in November, according to attorney Reed Stark.
In the opinion of Reed Stark, who was part of the SEC a few years ago, the regulatory body is advancing its crusade against Binance and Changpeng Zhao. This, as a result of the plea agreement. “The SEC now has at its disposal a trove of new and comprehensive incriminating evidence relating to Binance drawn from the various allegations, orders, attachments and other charging documents relating to Binance,” Stark said.
For Stark, this new evidentiary record will allow the SEC to have “formidable cannon fodder” for investigators and litigants to “strengthen their accusations and arguments related to Binance.”
Binance Customer Information is at the Mercy of the US
As part of Binance and CZ's plea agreement, the company is subject to a data sharing regime with authorities and regulators. This, since they agreed to accept requests for information from the US government.
This means that the US government can now access the personal information of all Binance users whenever it requires it. As well as company data, documents, records, employees, former employees, agents, intermediaries, consultants, representatives, distributors, licensees, contractors, suppliers and joint venture partners. Added to this is that, in accordance with regulatory standards, Binance tracked all transactions between 2018 and 2022, in order to file suspicious activity reports. The monitoring of operations will also be verified by a supervisory company chosen by the US government, but paid by Binance.
The agreement requires Binance to offer the Department of Justice, the Financial Crimes Network and all types of financial regulators instant access to company information, as well as allow audits, examinations and inspections. The latter with the intention of exposing Binance and its clients “to a surveillance service 24 hours a day, 7 days a week, 365 days a year”, as explained by lawyer John Reed Stark, who assures that the exchange “faces unprecedented government scrutiny of epic proportions.”
Binance's judicial situation, which increasingly seems to get worse in the United States, puts the cryptocurrency ecosystem on alert, considering that this is one of the most important companies in the sector. Even due to the litigation against the company, fears have grown in the community about a hypothetical collapse of Binance. A situation that could multiply the damage left by the fall of the FTX exchange, at the end of 2022.
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