lawsuit SEC to the Binance cryptocurrency exchange could set a significant precedent for the industry, while the trading platform’s complex legal structure could potentially weaken its position in court. Andrey Tugarin, managing partner of GMT Legal, stated this in a comment to Cryplogger.
He recalled that the Commission filed 13 different charges against Binance, including those related to operating as an exchange, broker and clearing agency without proper registration, unregistered offering and sale of crypto assets, unlimited access to trading for US citizens, misleading investors and others.
In turn, SEC Chairman Gary Gensler argues that Binance, by its actions, demonstrated a deliberate evasion of legal requirements.
“The accusations are multiple and very serious, and the Commission is known for high-profile precedents, and this one can definitely become indicative for the entire crypto industry. The regulator definitely prepared very well for this dispute, ”the lawyer is convinced.
It’s too early to talk about Binance’s readiness for litigation, but its position could be significantly weakened by the complex corporate structure of the platform.
“It is a group of companies located in various jurisdictions around the world, which provides potential tax advantages and operational flexibility. At the same time, this structure complicates regulatory oversight and raises questions about legal liability, especially with respect to Binance.US,” explains Tugarin.
The expert emphasized that Binance.US is not a separate legal entity, but is managed by BAM Trading Services Inc., which is registered in the US and has a partnership with Binance. This, in particular, is stated in a separate lawsuit. CFTC.
“This group of companies and its affiliates have many internal conflicts of interest, which is also noted by government agencies in their lawsuits against Binance,” adds the lawyer.
The intricate corporate structure seriously reduces the transparency of financial flows within the group.
“For example, it is not known exactly how much and how each of the companies earns, what activities make a profit, whether there is/was a mixing of the assets of investors and the company in the past,” Tugarin argues.
According to him, in court, Binance will have to convincingly disclose and prove its transparency and compliance with the law, “which the exchange has always been proud of and what it spoke about in its press releases.”
“If she fails, then serious fines will follow with the possible closure of companies, or the suspension of their activities, at least in the United States. This will probably have less impact on users from other countries, but for US clients the opportunity to work on the exchange may be completely closed, ”the expert believes.
Since the beginning of the year, Binance has been under the scrutiny of almost every critical US regulatory body — the CFTC, the US Department of Justice, and now the SEC. At the same time, regulators agree on many issues with the trading platform, including the potential mixing of company and user assets, circumvention of sanctions and other requirements of US law.
“It can already be assumed that it is the SEC lawsuit against Binance and the CEO of the exchange, Changpeng Zhao, that carries the most serious risks for the exchange in comparison with the proceedings of other government agencies,” Tugarin summed up.
Earlier, the media found parallels with the FTX case in the SEC lawsuit against Binance.
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Cryplogger Newsletters: Keep your finger on the pulse of the bitcoin industry!
lawsuit SEC to the Binance cryptocurrency exchange could set a significant precedent for the industry, while the trading platform’s complex legal structure could potentially weaken its position in court. Andrey Tugarin, managing partner of GMT Legal, stated this in a comment to Cryplogger.
He recalled that the Commission filed 13 different charges against Binance, including those related to operating as an exchange, broker and clearing agency without proper registration, unregistered offering and sale of crypto assets, unlimited access to trading for US citizens, misleading investors and others.
In turn, SEC Chairman Gary Gensler argues that Binance, by its actions, demonstrated a deliberate evasion of legal requirements.
“The accusations are multiple and very serious, and the Commission is known for high-profile precedents, and this one can definitely become indicative for the entire crypto industry. The regulator definitely prepared very well for this dispute, ”the lawyer is convinced.
It’s too early to talk about Binance’s readiness for litigation, but its position could be significantly weakened by the complex corporate structure of the platform.
“It is a group of companies located in various jurisdictions around the world, which provides potential tax advantages and operational flexibility. At the same time, this structure complicates regulatory oversight and raises questions about legal liability, especially with respect to Binance.US,” explains Tugarin.
The expert emphasized that Binance.US is not a separate legal entity, but is managed by BAM Trading Services Inc., which is registered in the US and has a partnership with Binance. This, in particular, is stated in a separate lawsuit. CFTC.
“This group of companies and its affiliates have many internal conflicts of interest, which is also noted by government agencies in their lawsuits against Binance,” adds the lawyer.
The intricate corporate structure seriously reduces the transparency of financial flows within the group.
“For example, it is not known exactly how much and how each of the companies earns, what activities make a profit, whether there is/was a mixing of the assets of investors and the company in the past,” Tugarin argues.
According to him, in court, Binance will have to convincingly disclose and prove its transparency and compliance with the law, “which the exchange has always been proud of and what it spoke about in its press releases.”
“If she fails, then serious fines will follow with the possible closure of companies, or the suspension of their activities, at least in the United States. This will probably have less impact on users from other countries, but for US clients the opportunity to work on the exchange may be completely closed, ”the expert believes.
Since the beginning of the year, Binance has been under the scrutiny of almost every critical US regulatory body — the CFTC, the US Department of Justice, and now the SEC. At the same time, regulators agree on many issues with the trading platform, including the potential mixing of company and user assets, circumvention of sanctions and other requirements of US law.
“It can already be assumed that it is the SEC lawsuit against Binance and the CEO of the exchange, Changpeng Zhao, that carries the most serious risks for the exchange in comparison with the proceedings of other government agencies,” Tugarin summed up.
Earlier, the media found parallels with the FTX case in the SEC lawsuit against Binance.
Found a mistake in the text? Select it and press CTRL+ENTER
Cryplogger Newsletters: Keep your finger on the pulse of the bitcoin industry!