SEC sues Binance and CZ

[Rikafip]

New day, new problems for Binance and CZ in the US. After getting sued by CFTC earlier this year, this time SEC sued them them for breaking US securities rules.

Looks to me like its just the matter of time when Binance leaves US market completely, whether they want it or not.  

https://tokenist.com/sec-sues-binance-and-changpeng-zhao-alleging-securities-laws-violation/

[1714289564]

1714289564

[macson]

I also read news about this in this article,

In its lawsuit, the formidable regular alleges mishandling of customer funds, false statements to regulators and investors, inadequate control of manipulative trading, and knowingly putting customers and investors at risk. The price of Binance's native BNB token has plunged by more than 6% on the news. Notably, the SEC alleges that both BNB and the BUST stablecoin are unregistered securities.   The SEC lawsuit marks another regulatory body's crackdown on the crypto giant, following a similar action taken by the U.S. Commodity Futures Trading Commission (CFTC) back in March. The CFTC accused Binance and its CEO of operating an "illegal" exchange with a "sham" compliance program, accusing them of intentionally evading U.S. law for commercial gain. In the meantime, Bloomberg recently reported that the crypto giant, which is intensifying regulatory scrutiny and lawsuits, is reportedly considering Richard Teng, a seasoned executive with regulatory experience, as a potential successor to current CEO Changpeng Zhao.

[1] https://u.today/breaking-sec-unleashes-legal-fury-on-binance-and-cz-bnb-plunges

to be honest, this is just an accusation because the SEC has not been able to prove everything they accuse Binance and CZ I'm sure this drama won't last long ^{(bnb prices which corrected a few percent because of this news will definitely go up again)}, the SEC based on their charges is a bit confusing imo ^{(maybe the SEC wants to try to show their power)}

[OmegaStarScream]

I'm not familiar with the legalities here but what I can't seem to understand is why is CZ still running Binance.us with everything that has been happening with BUSD and the CFTC lately.

[mk4]

Take note while this is definitely not good, it's important to understand that this is a civil case NOT a criminal case; as pointed out in the below tweet. I'm not some law expert but I'd assume it's a significant difference.

https://twitter.com/WuBlockchain/status/1665751740380229632?s=20

[UmerIdrees]

New day, new problems for Binance and CZ in the US. After getting sued by CFTC earlier this year, this time SEC sued them them for breaking US securities rules.

Looks to me like its just the matter of time when Binance leaves US market completely, whether they want it or not.  

https://tokenist.com/sec-sues-binance-and-changpeng-zhao-alleging-securities-laws-violation/

Binance and CZ has been a target for quite some time but binance always come up strong. Not this time US SEC sues Binance, founder Zhao alleging securities law violations, they have sued CZ, what will be the consequences of this if this news holds up ?
Is Binane US will only be in trouble or the binance globally will be affected because remember this time the target is CZ himself and not only the exchange Binance US  

[Rikafip]

I'm not familiar with the legalities here but what I can't seem to understand is why is CZ still running Binance.us with everything that has been happening with BUSD and the CFTC lately.

I've asked myself the very same question and only thing that makes sense is that he is either making enough money that is worth it to go though all that hassle, or he plans to make it in the future so its worth it to suck it up and fight.

Take note while this is definitely not good, it's important to understand that this is a civil case NOT a criminal case; as pointed out in the below tweet. I'm not some law expert but I'd assume it's a significant difference.

https://twitter.com/WuBlockchain/status/1665751740380229632?s=20

One of the users commented under that tweet "That doesn't prevent criminal charges at a later date once more is revealed through discovery in the civil suit" so maybe their evidence is just not strong enough as of yet.

[stompix]

One of the users commented under that tweet "That doesn't prevent criminal charges at a later date once more is revealed through discovery in the civil suit" so maybe their evidence is just not strong enough as of yet.

Hihi, one tweet below is another explanation, the SEC can't start a criminal investigation, it can only prosecute in civil and administrative courts, but all it takes is a notification to the DoJ for that to start a criminal one, and once the DoJ accept this from the SEC it's usually game over and plead guilty if you want to get out, as Hayes&Co did in the Bitmex case.

I don't like CZ and I don't like Binance but I don't think he's that stupid to play with fire.
He has pushed things too far and I think he thought he is invincible with all his scheming but he's in for a rude awakening.

[Woodie]

Sec and its arm twisting tactics!

And why is Sec suing Changpeng Zhao (CZ) in his personal capacity,  isn't this some kind of intimidation because I thought Binance and its CEO need to distinguished here and to some extent CZ should be protected from such liabilities...
Btw Isn't suing Binance enough to make their case, than going for CZ too??

[bbc.reporter]

I also read news about this in this article,

In its lawsuit, the formidable regular alleges mishandling of customer funds, false statements to regulators and investors, inadequate control of manipulative trading, and knowingly putting customers and investors at risk. The price of Binance's native BNB token has plunged by more than 6% on the news. Notably, the SEC alleges that both BNB and the BUST stablecoin are unregistered securities.   The SEC lawsuit marks another regulatory body's crackdown on the crypto giant, following a similar action taken by the U.S. Commodity Futures Trading Commission (CFTC) back in March. The CFTC accused Binance and its CEO of operating an "illegal" exchange with a "sham" compliance program, accusing them of intentionally evading U.S. law for commercial gain. In the meantime, Bloomberg recently reported that the crypto giant, which is intensifying regulatory scrutiny and lawsuits, is reportedly considering Richard Teng, a seasoned executive with regulatory experience, as a potential successor to current CEO Changpeng Zhao.

[1] https://u.today/breaking-sec-unleashes-legal-fury-on-binance-and-cz-bnb-plunges

to be honest, this is just an accusation because the SEC has not been able to prove everything they accuse Binance and CZ I'm sure this drama won't last long ^{(bnb prices which corrected a few percent because of this news will definitely go up again)}, the SEC based on their charges is a bit confusing imo ^{(maybe the SEC wants to try to show their power)}

Agreed. Uncle Gary and the US SEC also have unresolved cases against Coinbase and Ripple. This will certainly take a much longer time than expected. I am quite sure the market will recover and enters a new all time high before the case is resolved hehehe. This is because everything about the SEC's complaints are based on regulatory inclarity. They are playing the game of which exchange or project should they sue at any given time hehe.

In any case, here is the filing of the SEC's case against Binance, Binance.us and CZ. These coins were mentioned as illegal securities. It is not limited to them, however. It implies more tokens can be included.



Since the Binance Platforms launched, Defendants have made available for
trading on them crypto assets that are offered and sold as investment contracts, and thus as
securities. This includes, but is not limited to, BNB, BUSD, and the units of each of the crypto
asset securities further described below—with trading symbols SOL, ADA, MATIC, FIL,
ATOM, SAND, MANA, ALGO, AXS, and COTI (collectively, the “Crypto Asset Securities").

Source https://www.docdroid.net/I02zzqT/sec-v-binance-4-pdf#page=85

[malcovi2]

Sec and its arm twisting tactics!
And why is Sec suing Changpeng Zhao (CZ) in his personal capacity,  isn't this some kind of intimidation because I thought Binance and its CEO need to distinguished here and to some extent CZ should be protected from such liabilities...
Btw Isn't suing Binance enough to make their case, than going for CZ too??

"Through thirteen charges, we allege that Zhao and Binance entities engaged in an extensive web of deception, conflicts of interest, lack of disclosure, and calculated evasion of the law," said SEC Chair Gary Gensler.

"As alleged, Zhao and Binance misled investors about their risk controls and corrupted trading volumes while actively concealing who was operating the platform, the manipulative trading of its affiliated market maker, and even where and with whom investor funds and crypto assets were custodied."

https://www.france24.com/en/live-news/20230605-us-regulators-charge-binance-with-violating-securities-laws-1

I think we know that no ones checks Binance's financial records.
I also want to know where does Binance get those APY especially in the stablecoins services.

[mk4]

One of the users commented under that tweet "That doesn't prevent criminal charges at a later date once more is revealed through discovery in the civil suit" so maybe their evidence is just not strong enough as of yet.

Yes. People think that Binance is immediately going to go bust or something, but in reality things like this are a long, slow, and gruellingly painful process. In the end we're likely going to get minor news concerning this topic month-by-month for some more added volatility.

[Yamane_Keto]

In its lawsuit, the formidable regular alleges mishandling of customer funds, false statements to regulators and investors, inadequate control of manipulative trading, and knowingly putting customers and investors at risk.

[1] https://u.today/breaking-sec-unleashes-legal-fury-on-binance-and-cz-bnb-plunges

What scares me the most is the misuse of clients’ money because if any problem occurs, random FUD started and money withdrawals start, suddenly we will discover that the platform owns only less than 10% of the depositors’ money as liquidity, and more liquidity as BNB that are printed to cover the money that was withdrawn. This reminds me of what happened with FTX.

Those affected in these incidents will only be the users and the reputation of the cryptocurrency, so everyone who has money on that platform is better to withdraw it from that platform, and stay away from BNB pairs for a bit (unless you trust the platform)



edit

SEC Complaint Aims to Unilaterally Define Crypto Market Structure Binance reply https://www.binance.com/en/blog/ecosystem/sec-complaint-aims-to-unilaterally-define-crypto-market-structure-8707489117122437402


fast reading

We are disappointed that the U.S. Securities and Exchange Commission chose to file a complaint today against Binance seeking, among other remedies, purported emergency relief.  From the start, we have actively cooperated with the SEC’s investigations and have worked hard to answer their questions and address their concerns.  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.  We are disheartened by that choice.

They are promises and claims that they have tried to do anything to avoid litigation and we will do everything we can to defend ourselves, emotional talk without evidence, I bet they will leave the US market soon.

[virasog]

One of the users commented under that tweet "That doesn't prevent criminal charges at a later date once more is revealed through discovery in the civil suit" so maybe their evidence is just not strong enough as of yet.

Yes. People think that Binance is immediately going to go bust or something, but in reality things like this are a long, slow, and gruellingly painful process. In the end we're likely going to get minor news concerning this topic month-by-month for some more added volatility.

If nothing seriously bad happens in a day or two and if the CZ tweets that things are under control, the market will pump instant. It is just a matter of which way the case is going and who is playing strong.

As long as Binance do not disable withdrawals or we have other bad news about this case, I think the crypto market will recover. Also, there is another news where SEC sues Coinbase 24 hours after serving papers to rival exchange Binance, which is now causing another panic in the market. Look like the security and exchange commission is after the crypto exchanges aggressively.

[mikeywith]

I don't like CZ and I don't like Binance.

Why tho? what is exactly wrong with Binance? it doesn't matter how many wrong things anyone would mention, they are the most sane centralized exchange the crypto space has ever had, it would be naive to expect too much from a centralized exchange, but Binance delivers everything that could be delivered and nobody does it better.

We have to understand that at this point an attack on Binance is essentially an attack on the whole ecosystem, Binance has more trading volume than the next dozen exchange on the list combined. if it was a matter of Binance VS Electrum that would be a different fight, but this fight is the corrupt SEC vs the largest crypto exchange, it's funny that the SEC has yet to sue FTX but do everything at their disposal to sue Binance.

[stompix]

Why tho? what is exactly wrong with Binance?

Refusing to implement LN, charging the most significant fees for BTC withdrawals and charging more for segwit than legacy, promoting shitcoins as BTC alternatives, the constant lies of CZ about being licensed in Singapore, Japan, Malta, then god knows where, his idea about reverting the chain when Binance got hacked, how he always tried to weasel his way out and have the moral high ground despite being knowledgeable about all the fuckups with his partners/friends, see the FXT drama, the fake "proof of funds", the whole #SAFU that has funds actually and is insured for less than 2% of their holdings, lies after lies after lies.

We have to understand that at this point an attack on Binance is essentially an attack on the whole ecosystem

Meh, "A Peer-to-Peer Electronic Cash System", sorry but having a centralized entity dealing in control of user funds and manipulating markets is as far as possible from what Bitcoin was meant to be and as close as possible to a bank. After all, what is the difference here between trading penny stocks and shitcoins on Binance?

it's funny that the SEC has yet to sue FTX

The SEC can't sue FTX, it has raised charges against Sam and Nishad Singh, for FTX collapse the SEC has no business there, that's the role of CFTC and this one has already filed charges against both FTX and Alameda.

[mikeywith]

Refusing to implement LN, charging the most significant fees for BTC withdrawals and charging more for segwit than legacy, promoting shitcoins as BTC alternatives, the constant lies of CZ about being licensed in Singapore, Japan, Malta, then god knows where, his idea about relying on the chain when Binance got hacked, how he always tried to weasel his way out and have the moral high ground despite being knowledgeable about all the fuckups with his partners/friends, see the FXT drama, the fake "proof of funds", the whole #SAFU that has funds actually and is insured for less than 2% of their holdings, lies after lies after lies.

Alas, you probably forgot to mention a dozen more bad things about Binance, it's why I said you shouldn't be expecting much from a centralized exchange, Binance is as best as it gets as far as a centralized exchange is concerned, it's the reason why it has nearly half the trading volume of the whole crypto space.

Meh, "A Peer-to-Peer Electronic Cash System", sorry but having a centralized entity dealing in control of user funds and manipulating markets is as far as possible from what Bitcoin was meant to be and as close as possible to a bank. After all, what is the difference here between trading penny stocks and shitcoins on Binance?

What Bitcoin was meant to be, and how it is nowadays are two different things, we can live in the fancy of the white paper, or face reality. The reality is, the percentage of people who treat BTC as a P2P E-cash system rounded to the nearest whole number is 0%, it's now a store of value as far as the majority of people who use it are concerned.

Binance is a centralized exchange, it's a massive gate for fiat going into crypto, BTC wouldn't be worth what it is today if not for the liquidity provided by those centralized exchanges, I'd imagine it would be a problematic task bringing the market cap of crypto to 1 trillion with dozen guys meeting at Starbucks to exchange cash for crypto.

See, I don't disagree with you on how "terrible" things have become and how the security, and value of crypto have been tied to centralized exchanges that are known for lies, corruption, and nearly everything the legacy banks are known for, but you can't have everything at once. if you want to get rid of all the "bad guys" in the crypto space, you will have to start from when BTC was worth no more than a couple of hundred bucks, hard to buy, difficult to sell, no known market value and only a couple nerds use it to buy Pizza and some CPU cooler.

For Binance as it stands right now, every hack that resulted in funds lost was paid back to the clients, they are pretty flexible with other nations and don't suck up to the hegemony of the united states, they are the last exchange to ban a U.S banned country, they operate one massive mining pool that helps to a good degree with mining decentralization, they have very good customer support. if we can't say they are the most sane, we can at least say they are the least terrible (which I believe is a better description)

The SEC can't sue FTX, it has raised charges against Sam and Nishad Singh, for FTX collapse the SEC has no business there, that's the role of CFTC and this one has already filed charges against both FTX and Alameda.

ha? According to the defination of the SEC role:

The Securities and Exchange Commission (SEC) is a U.S. government oversight agency responsible for regulating the securities markets and protecting investors.

If they can SUE Binance and Coinbase, they sure could sue FTX, didn't U.S citizens lose billions of dollars in FTX? wasn't the SEC responsible for "protecting" investors?

Not sure why you say that is the rule of CFTC, it's true that if something is a commodity then it's under the CFTC, but currency trading is under SEC, they most certainly could sue FTX for a dozen things.

Here is a TL;DR

The SEC and CFTC are engaged in a turf war over regulatory oversight of cryptocurrencies.
The CFTC has the authority to regulate futures and derivatives trading of cryptocurrencies like Bitcoin.
The SEC focuses on areas such as initial coin offerings (ICOs) and decentralized finance (DeFi) platforms.
In order to avoid regulatory uncertainty, the SEC and CFTC have been urged to cooperate.
The ultimate authority over crypto regulation and legislation is yet to be determined.

[stompix]

What Bitcoin was meant to be, and how it is nowadays are two different things, we can live in the fancy of the white paper, or face reality. The reality is, the percentage of people who treat BTC as a P2P E-cash system rounded to the nearest whole number is 0%, it's now a store of value as far as the majority of people who use it are concerned.

I know too well the difference between reality and how I would want things to be, I would love to see a lot of things happening differently and I'm also sure most of my dreams and hopes will never materialize, I'm beginning to lose even hope that Bitcoin will be ever used in purchasing stuff more than gold is nowadays. But this can't stop me from hating this reality! 

ha? According to the defination of the SEC role:

The Securities and Exchange Commission (SEC) is a U.S. government oversight agency responsible for regulating the securities markets and protecting investors.

If they can SUE Binance and Coinbase, they sure could sue FTX, didn't U.S citizens lose billions of dollars in FTX? wasn't the SEC responsible for "protecting" investors?

Mainly because exchanges are definitely on CFTC's turf since none are registered with the SEC, so the SEC deals with sales of coins or cases that involved defrauding like in the normal stock market that's why it has filed charges against the operators and not against FTX, while the CFTC has filed charges against both the exchanges and the owners.
FTX Derivatives was licensed and registered by the CFTC, not the SEC, they were the overseer and it's pretty normal they should deal with the case.

[2Pizza410000BTC]

🚨 WITHDRAW YOUR #BITCOIN FROM EXCHANGES 🚨

https://twitter.com/BitcoinMagazine/status/1666206476744941621?t=Vp3mD9WJqyk14POUVC202g&s=19

[mikeywith]

I'm beginning to lose even hope that Bitcoin will be ever used in purchasing stuff more than gold is nowadays. But this can't stop me from hating this reality! 

Why would you even hope that you will spend dear Bitcoin to buy a pair of socks when there are less valuable currencies that you can use? "bad money drives out good.", we will have to run out of every medium of value before we can use BTC for every payment.

I think Satoshi calling it "A Peer-to-Peer Electronic Cash System" was either misunderstood by the public, since those words don't imply that BTC would be used for daily payments and only meant that you could send/receive it on P2P bases without having a centralized party approval, something like "Cash", hence the "Cash" in the wordings.

The other possibility is the fact that Satoshi underestimated his invention, he didn't see all of this coming, and he didn't think BTC would eventually be too good to be spent.

Regardless of which scenario is more likely, I think the backbone of BTC is the ability to transact it freely without government approval, this has been holding true since its inspection, how we treat it isn't something major, in fact, it really almost doesn't matter, whether you use it to buy coffee to save it for your grandchildren in a cold wallet, it doesn't change any of it's decentralized and limited supply characteristics.

Now back to the topic and to give more clarity on why I think this is a systematic war against crypto and not just a war on an exchange, the SEC is a government agency, they act based on what the government wants, the concept of consumer protection is just for media consumption, the government knows that attacking central exchanges is key in its war against crypto, whether the goal is to destroy crypto all together or just to control it, they see things we don't, the fact that they started with the exchanges is somewhat good evidence that they think exchanges are a point of strength for bitcoin and crypto as a whole.

If you take down centralized exchanges, you take away too much from crypto, without having to piss your people off because again, you are doing all this to protect them from the devils like Binance, while in the background your real intention is to cripple crypto, if you manage to bring BTC's price down to 3 digits again, it becomes easier to control.

Within our own inner circuit of the crypto community, we can curse Binance and all the centralized exchanges every day of the week, but when a government agency attacks a crypto-based entity, we should stand against the government, it is safe to assume that every monetary decision taken by any government around the globe will have a negative impact on the average citizen, if Binance falls on its own or due to compensation that would be perfectly fine, failing by government's action is going to have a huge negative impact on the crypto space.

[Darker45]

This shouldn't come as a surprise to many. This was expected. It wasn't a matter of if but when. Now, finally, the lawsuit was filed.

Depending on how the case develops, I don't think Binance would just "leave the US market completely." It's too huge to just abandon. As a matter of fact, I completely understand why Binance is acting differently on this one. While Binance quickly packed up, didn't even put up much of a fight, and left a number of countries due to regulatory and other legal challenges, it has now promised to defend itself "vigorously."

There will also surely be a lot of backchanneling and backstage negotiations on this one.