Binance.US Enlists Former SEC Director in Defense Against Fraud Charges

Binance USA

According to Monday’s filing, Binance.US stated its significant two-year-long efforts to cooperate with the SEC.

Following the strong allegations made by the US SEC last week, Binance.US is gearing up to mount its defense. The company has taken a significant step by hiring four lawyers from Milbank LLP, along with George Canellos, the co-director of the SEC’s enforcement division.
Binance.US is confronted with charges of operating as an illegal securities exchange. To bolster its defense, the company has enlisted George Canellos, the current global head of the litigation and arbitration group at Milbank.


Also Read: CZ Denies Allegations of Binance User Fund Diversion

With extensive experience supervising numerous SEC investigations and serving as both an SEC and DOJ prosecutor, Canellos brings a unique and formidable skill set to the table. Former head of the SEC’s Office of Internet Enforcement, John Reed Stark, likened Canellos’ capabilities to a combination of Liam Neeson and Perry Mason.

In addition to George Canellos, three other attorneys will be joining the defense team for Binance.US as they face a lawsuit filed by the SEC on June 5.

The lawsuit targets Binance.US, the global Binance exchange, and its owner Changpeng Zhao, alleging violations of US securities laws, including mishandling customer funds and providing misleading information to investors and regulators.

The SEC has sought a temporary freeze of Binance.US’s assets to protect customer funds, a request which Binance has refuted, denying the allegations made by the SEC. Following the SEC’s actions, several banks expressed their intention to sever ties with Binance.US, leading the platform to temporarily suspend USD deposits.

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Binance.US Defends Against Fraud and Manipulation Charges

In a recent court filing on Monday, Binance.US countered the claims made by the US SEC and emphasized the significant efforts they have made to cooperate with the regulatory authority since December 2020. The SEC had accused Binance.US and its parent company of redirecting more than $12 billion in customer assets to funds controlled by Changpeng ‘CZ’ Zhao, the owner and founder. This marks the first instance where Binance.US has directly refuted the SEC’s allegations.

In addition to the allegations against Binance.US, the US SEC has accused Changpeng Zhao of commingling customer assets with funds under his control. Lawyers representing Binance.US’s parent company, BAM Trading, responded by stating that the company ensures its customers’ fiat currency is held in segregated accounts, distinct from any corporate funds.

Binance.US has acknowledged that Changpeng ‘CZ’ Zhao is the owner of the bank account associated with BAM Trading. However, they denied his signatory authority over the account. In contrast, the SEC argues that Zhao exercises control over these bank accounts, suggesting a lack of separation between Binance and Binance.US. It is widely believed that Zhao holds a controlling stake in both entities.

Binance.US has witnessed a significant decline in its market share over the past two months, plummeting to a mere 4.8%.

Also Read: Binance US: User Assets Secure, Operations Continue Despite SEC TRO

Important: This article is intended solely for informational purposes. It should not be considered or relied upon as legal, tax, investment, financial, or any other form of advice.

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