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SEC’s probe on Binance.US was initiated in 2020, recent court filings reveal

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TL;DR Breakdown

  • Court filings reveal SEC’s 2020 investigation into Binance.US, indicating long-term scrutiny.
  • SEC’s probe centers on alleged securities law violations and substantial profits by Binance.US.
  • Lawsuit filed by the SEC targets Binance.US, its entities, and its CEO, seeking an asset freeze.

Binance.US, the American arm of the global cryptocurrency exchange Binance, is under investigation by the U.S. Securities and Exchange Commission (SEC) for possible violations of federal securities laws. Court filings released on Tuesday revealed that the SEC has been scrutinizing Binance.US since 2020, with evidence pointing to hundreds of millions of dollars in illicit profits.

In a lawsuit filed on Monday, the SEC accused Binance’s U.S. and global entities, as well as its CEO Changpeng “CZ” Zhao, of operating an unregistered securities exchange by facilitating the trading of cryptocurrencies. The regulatory body has subsequently sought to freeze Binance.US assets, intensifying the legal battle between the crypto exchange and the SEC.

According to court filings, the SEC initiated an internal investigation and assigned officials to gather testimony starting on August 17, 2020. Colby Steele, a lawyer representing the SEC, highlighted that the investigation focused on potential violations of federal securities laws by BAM Trading Services Inc., which conducts business as Binance.US. The SEC’s accountant, Sachin Verma, further disclosed that BAM Trading had generated $411 million in revenue over a slightly over four-year period, with a calculated gross profit of $225 million. As Binance.US is not publicly traded, the company has generally maintained secrecy regarding its financial operations.

In response to the SEC’s allegations, Binance.US released a statement via Twitter on Monday. The company claimed that it had engaged in good-faith discussions with the SEC for nearly two and a half years and regarded the lawsuit as “baseless” and “unjustified by the facts, by the law, or by the Commission’s own precedent.”

The SEC’s ongoing investigation into Binance.US stems from concerns over potential securities violations. The regulatory body has amassed evidence suggesting that the cryptocurrency exchange has profited from unregistered securities transactions amounting to hundreds of millions of dollars. These allegations have led to a legal battle between Binance.US and the SEC, with the latter seeking to freeze the exchange’s assets.

Binance.US responds to the lawsuit

Binance.US maintains its innocence and contests the SEC’s claims, asserting that it has cooperated with the regulatory body in good faith for an extended period. The company argues that the lawsuit lacks merit, citing the absence of factual evidence, legal justification, and consistency with the SEC’s own precedents. Binance.US’s response highlights its commitment to upholding industry standards and operating within legal boundaries.

As the legal proceedings unfold, the outcome of the SEC’s investigation will have significant implications for the broader cryptocurrency industry. The case is expected to shed light on the regulatory environment surrounding digital assets in the United States and may influence future developments in the sector.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

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