Recent events have unfolded involving legal action by the Securities and Exchange Commission (SEC) against two major cryptocurrency exchanges
On June 5, the SEC filed a lawsuit against Binance, claiming that they mishandled customer funds and misled regulators and traders. The following day, the SEC accused Coinbase of operating without proper registration as a stockbroker, exchange, and clearinghouse.
New details have surfaced regarding the Binance lawsuit, revealing accusations of deceptive practices by Binance and raising allegations against SEC Chairman Gary Gensler.
US Senators accuse Binance of lying
According to a recent Bloomberg report on June 8, Senators Elizabeth Warren (D-Mass.) and Chris Van Hollen (D-Md) sent a letter to U.S. Attorney General Merrick Garland, stating that Binance may have provided misleading information about its business practices. They specifically question the independence of Binance’s subsidiary, Binance.US, which Binance claims to be a separate entity.
In the letter, they expressed concerns by stating: “Binance and its related entities have deliberately avoided regulators, provided resources to criminals and individuals evading sanctions, and withheld important financial information from their customers and the public.”
The letter further mentioned, “Although Binance CEO Changpeng Zhao has asserted that Binance.US is a completely independent entity, the reality is that it operates as a de facto subsidiary under the control of Binance.”
In March, the senators made a bipartisan request for Binance to be transparent about possible “illegal business practices.” However, Binance has not yet responded to these allegations.
Binance’s legal team claims former connections to Gensler
In addition to the letter from Senators Warren and Van Hollen, another significant development in the Binance story is gaining attention in the Web3 community. According to a filing on June 7 by Zhao and his lawyers, Gensler offered to provide informal advice to Binance back in 2019.
According to the filing submitted by Gibson Dunn and Latham & Watkins, the law firms representing Binance, it is alleged that Gensler expressed willingness to offer advice to the cryptocurrency exchange. They claim that Gensler had multiple discussions with Binance and Zhao executives in March 2019, followed by a lunch meeting between Gensler and Zhao in Japan later that month. The documents suggest that both parties maintained contact, and Zhao believed that the current chairman was comfortable serving as an informal advisor.
Two years later, in 2021, Gensler became the head of the SEC.
WSJ reported in March that Binance approached Gensler about an advisory role
Binance lawyers in a filing today says Gensler approached them in 2019
Really important that we get clarity around this asap.
— Frank Chaparro (@fintechfrank) June 8, 2023
I am impressed that Gary Gensler took @cz_binance rejecting him so personally that he quit crypto and became the SEC chair solely to get his revenge
That’s dedication
— borovik.sol (@3orovik) June 8, 2023
Due to Gensler’s past relationship and interactions with Zhao, Binance’s legal team has requested his removal from all matters concerning the company. Binance’s counsel stated that Gensler should have been excluded from the case due to his history and the possibility of him being a significant witness.
Binance claims that the SEC has not yet confirmed their request and has urged Gensler to withdraw, or alternatively, for the Commission to provide an explanation for their decision.
Also Read: SEC Lawsuits Against Binance and Coinbase Spark Unity in the Crypto Industry
Also Read: US Court Directs SEC to Provide Clear Position on Coinbase’s Rulemaking Petition
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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