Binance, Ex-CEO Zhao Charged with Deliberate US Law Flouts

The United States Securities and Exchange Commission (SEC) has accused Binance, the world’s largest crypto exchange, and its former CEO, Changpeng Zhao, of deliberately violating U.S. laws. The allegations come after a $4.3 billion settlement between Binance, Zhao, and the Department of Justice (DOJ), highlighting the ongoing regulatory scrutiny facing the cryptocurrency sector.

Binance, Zhao, Accused of Dodging US Laws

The SEC’s recent filings argue that the plea deals from Binance and Zhao, announced by the DOJ in late November, are crucial in demonstrating their intentional efforts to circumvent U.S. laws. These claims counter the defenses previously put forward by Binance and Zhao, who have argued against the SEC’s jurisdiction and the applicability of its securities laws to their operations.

Binance’s motion to dismiss the case, filed in September, was based on the contention that the SEC was distorting securities law texts to encompass crypto-related activities. This motion was part of a broader argument against the SEC’s attempts to extend its regulatory reach through litigation.

As part of its settlement with the DOJ, Binance admitted to choosing non-compliance with U.S. law to attract and retain American users. According to the SEC, this admission undermines the company’s argument regarding the extraterritorial nature of its actions.

Furthermore, the SEC highlighted Binance’s use of a U.S.-based technology service provider and the settlement of approximately $1.2 billion in transactions through Merit Peak, a market maker owned by Zhao. The regulator contends that Merit Peak acted as a link between Binance and its U.S. counterpart, Binance.US, thus reinforcing the connection with U.S. jurisdiction.

Zhao Stays in the US Awaiting Sentencing Hearing

The plea deals have led to significant consequences for Zhao, who resigned as CEO and now faces a sentencing hearing in February of the following year. He is required to remain in the U.S. until the hearing. The SEC’s documents suggest that Zhao’s actions were purposefully directed at the United States, justifying U.S. courts’ jurisdiction over him.

The case against Binance and Zhao, initiated by the SEC in June, involved allegations of violating securities laws and commingling customer funds, among other issues. This legal action reflects the growing focus of U.S. regulatory bodies on ensuring compliance within the rapidly evolving cryptocurrency market.

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