Binance.US interim CEO Norman Reed has accused the US Securities and Exchange Commission (SEC) of labeling the exchange a “cauldron of fraud” without providing evidence in court.
Binance.US CEO Accuses SEC of Baseless Claims, Calls Actions “Operation Chokepoint”
Reed alleged that the SEC’s actions, including cutting off Binance.US’s banking relationships and money traffic, were part of a broader strategy to crack down on the crypto industry, commonly referred to as “Operation Chokepoint 2.0.”
The SEC filed a lawsuit against Binance.US, Binance Global, and its founder Changpeng Zhao (CZ) in June 2023 following the collapse of crypto exchange FTX.
The charges included alleged securities law violations. While Binance Global later reached a $4.3 billion settlement and CZ was sentenced to prison, Binance.US was not part of the settlement and continued to battle the SEC in court.
“We will never be able to undo the damage that the SEC has done to us,” Reed said in an interview. Within weeks of the lawsuit, Binance.US lost billions in client funds, thousands of customers and had to lay off 70% of its workforce. The SEC’s accusations spooked corporate partners and led to a flight from banking and operational difficulties.
Despite the SEC’s allegations that Binance.US mishandled customer funds and sent money overseas, SEC attorneys admitted in court that there was no evidence of fraud.
Debanking and “Operation Chokepoint” Allegations
Reed linked the SEC’s actions to a systematic debanking effort targeting crypto firms, which he likened to a covert operation. “The SEC intimidated our partners with subpoenas and criminal charges. Payment processors and banks abandoned us, fearing reputational risk,” Reed said.
The term “Operation Chokepoint” has gained traction after figures like Ripple CEO Brad Garlinghouse and a16z’s Marc Andreessen used it to describe regulatory actions aimed at restricting access to banking for crypto businesses.
*This is not investment advice.
