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SEC seeks to prove Binance & founder CZ committed an FTX-style fraud

11/27/2023

In a report by the Wall Street Journal (WSJ) today, on November 27, 2023, the U.S. Securities and Exchange Commission (SEC) is actively seeking additional evidence to substantiate suspicions of fraud at Binance US. This development comes on the heels of the Department of Justice (DOJ) filing charges against Binance and its former CEO, Changpeng Zhao, earlier this month, charges to which he pleaded guilty.


Since June, the SEC has been pursuing legal action against Binance US, alleging fraudulent activities endangering client funds. Following the agreement between Binance and the DOJ, the SEC aims to bolster its case. Similar to the approach taken with FTX, the SEC is searching for any signs of fraud at the leading cryptocurrency exchange. Specifically, the commission is investigating whether Binance US provided CZ with a means to control assets on the platform, akin to the allegations involving Sam Bankman-Fried.


The SEC initiated legal action against Binance in June, asserting that the platform operated illegal securities exchanges. To date, the SEC's legal action has indicated the potential for Binance to mirror the path of FTX's fraud but has provided little concrete evidence of the activity itself. Nevertheless, the SEC is likely optimistic that the DOJ's investigation into Binance and its charges will catalyze progress in its own inquiry.


As part of the settlement with the U.S. government, Binance agreed to pay $4.3 billion. With CZ stepping down as CEO, Richard Teng has taken on the role of the exchange's new director.

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