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Announcement of US Securities and Exchange Commission lawsuit against Binance, Binance. US and Binance CEO Changpeng Zhao (CZ) may have surprised the crypto community, but the SEC’s focus on the exchange was well known. The contents of the suit caused a variety of reactions.
CZ stated in a tweet on the morning of June 5 that “the media gets the information before us” and the company did not see the SEC complaint at the time. Evidence of behind-the-scenes infighting can be seen in two statements Binance released in response to the lawsuit.
The exchange called the lawsuit “disappointing” in a blog post and highlighted the SEC’s failure to provide clarity and guidance and its impact on financial innovation. A later emailed statement went into more detail on the legal issues, stating the lack of due process and promising strong defense.
The SEC complaint should not have taken those who paid attention by surprise, Cory Clippsten, CEO of financial company Swan Bitcoin, said of the allegations. In a statement to Cointelegraph, he stated:
“These Binance methods were essentially open secrets, so no one who works in space will be surprised by any of the accusations.”
Some of the details are still surprising. The most quoted passage in the lawsuit undoubtedly came from Binance’s unnamed main compliance office in 2018, who said in a message to another employee of the company:
“We operate like an unlicensed securities exchange in the US, bro.”
More light has been shed on Brian Bux’s brief tenure as CEO of Binance. US. Brooks, former US Comptroller and CEO of Binance. US for three months in 2021, also named in the lawsuit (as “CEO B” of BAM Trading). According to the SEC, Brooks said in a deposition:
“At some point, it became clear to me that CZ was the CEO of BAM Trading and not me.[…] I realized, yes, I’m not really the one who runs this company, and the mission that I think I signed up for is not a mission. And as soon as I realized that, I left.”
The SEC has repeatedly stated that almost all cryptocurrencies are securities, so the list of 10 tokens can also be indicative. There are familiar claims, such as that Filecoin (FIL) is a security. Algorand (ALGO) has also been spun off earlier.
However, among the tokens listed as securities in the lawsuit, for Solana (SOL), Cardano (ADA) and Polygon (MATIC), the Binance lawsuit could be a warning shot.
And guess which tokens are illegal securities offerings. Spoiler alert it includes Solana and Cardano. pic.twitter.com/wMdICfIE3j
— Stephen Diehl (@smdiehl) June 5, 2023
There were already signs that the stock market was shaking. Almost simultaneously with the news of the SEC complaint, Bloomberg reported that Richard Teng could be approved to replace CZ as the exchange’s next CEO. The news service quotes “persons with direct knowledge”.
Related: Binance Prepares Checkbook for Potential Fines from US Regulators: Report
Teng was named head of all regional markets outside the US on May 29. He joined Binance Singapore in August 2021, having moved from the Abu Dhabi Global Markets Authority where he was CEO, and “rapidly rose through the ranks.”