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Binance-Related Criminal Indictment by DOJ is Coming, Says Former SEC Official
John Reed Stark, former chief of the SEC Office of Internet Enforcement, has hinted about a Binance-related criminal indictment from the US Department of Justice (DOJ).
In a tweet on Monday, June 12th, explaining the SEC and CFTC complaints, John Reed claimed that the US DOJ would likely file, or may have already filed under-seal, a criminal indictment against the crypto exchange, Binance for alleged money laundering. He said neither the SEC nor CFTC complaints intensely focused on money laundering as these charges are reserved for DOJ’s criminal indictment against the crypto exchange.
Why US DOJ Will File, Or Has Already Filed Under Seal, a Binance-Related Criminal Indictment
Having worked in the US SEC Enforcement Division for almost 20 years and managed many US SEC-DOJ joint prosecutions, IMHO, there exist a litany of indicators that US DOJ will file, or… pic.twitter.com/VSbDKUh5EF
— John Reed Stark (@JohnReedStark) June 11, 2023
His tweet reads:
“Neither the CFTC nor SEC case intensely focuses on money laundering. IMHO, that is the prosecutorial space that has been carved out and reserved for a US DOJ criminal prosecution relating to Binance. My take is that US DOJ is working with the SEC, CFTC, and multiple informants/whistleblowers, and the next axe to fall is the filing, or unsealing of, Binance-related criminal charges. Fail not at your peril.”
Binance Urges Judge to Reject SEC Asset Freeze Request
As reported, the Commodity Futures Trading Commission (CFTC) charged Binance group and its CEO, Changpeng Zhao, with “willful evasion of federal law and operating an illegal digital asset derivatives exchange” in March 2023. This was followed by an SEC lawsuit last week on June 5th, that levied 13 charges against Binance and its CEO for violating US securities laws. According to John Reed, both SEC and CFTC complaints read more like criminal charges.
While Binance has been under many investigations from various regulators, the current hottest topic in the case is the SEC emergency assets freeze action seeking to freeze Binance assets except customers’ withdrawals. This emergency action alleges Binance echoed the same behavior that brought down FTX, claiming that Binance sent $12 billion in users’ assets to CZ-controlled entities and accounts.
According to a Bloomberg report, in a filing on Monday, June 12th, Binance US urged the judge to reject the SEC asset freeze request, saying it would cripple its business and operations. The company said it had “made significant efforts” to cooperate with an SEC investigation since December 2020.
Binance US urged a judge to reject a SEC request to freeze billions of dollars of assets on the crypto exchange during a legal fight with the regulator https://t.co/tU2aUeBQES
— Bloomberg Crypto (@crypto) June 12, 2023
Pushing back against the allegation of commingling user assets, the exchange lawyers said that the exchange always maintained its customers’ fiat assets in segregated accounts held with its banking partners, separate from any corporate funds. They acknowledged that CEO CZ owns BAM Trading’s bank account, but without any signatory authority.
The Monday filing is the preparation for a hearing on the SEC emergency asset freeze action scheduled for Tuesday, June 13th. Furthermore, Binance has added four more lawyers from Milbank LLP, including a former co-director of the SEC’s enforcement division George Canellos, to strengthen its legal team.
Binance US added four lawyers to its legal team, including a former SEC co-director, as it prepares a defense against allegations of operating an illegal securities exchange https://t.co/IvVzjwoKRr
— Bloomberg Crypto (@crypto) June 12, 2023
