Former Binance US CEOs Play Key Role in SEC Lawsuit; Here’s Why

The former CEOs of Binance’s US arm, including a former top banking regulator and a crypto industry supporter, were instrumental in the US Securities and Exchange Commission’s (SEC) landmark lawsuit against the parent crypto exchange, according to the agency’s complaint. The SEC unveiled a 136-page complaint, citing testimony from “BAM CEO A” and “BAM CEO B,” likely referring to Catherine Coley and Brian Brooks, former chiefs of Binance.US.

Ex CEOs Testifies Against Binance.US

Former Binance.US CEOs, Catherine Coley and Brian Brooks, who have impressive backgrounds in the finance and crypto industry, played significant roles in the SEC’s lawsuit against Binance. Coley, a former Morgan Stanley executive and head of institutional liquidity at Ripple Labs, and Brooks is a former Coinbase legal chief and acting head of the Office of the Comptroller of the Currency.

They departed from Binance.US in 2021 following disputes with Binance’s CEO, Changpeng Zhao, regarding his control over Binance.US operations. The SEC’s complaint relies on their testimony to support allegations of faked trading volumes, wash trading, commingling of funds, and a lack of separation between Binance.US and its parent company.

Read CoinGape’s Lawsuit Coverage..

The SEC complaint revealed that “BAM Trading,” the entity behind Binance.US, was established as part of a plan to evade US legal scrutiny. Despite claims of separation, Zhao maintained significant involvement and control over the Binance.US platform.

He hired and directed Coley as CEO, while maintaining control over BAM Trading’s trading data. Binance employees also had signatory authority over Binance.US’ bank accounts, enabling Zhao and Binance to transfer funds without the knowledge of BAM Trading or Coley.

SEC’s Accusations Escalate

The SEC also accused Binance and Binance.US of acting as an exchange, clearing agency, and broker-dealer in crypto asset securities without proper registration. Numerous assets, including Binance’s BNB token and BUSD stablecoin, were labeled as unregistered securities.

Binance, CEO Zhao, BAM Trading, and BAM Management face 13 counts in federal court. Binance stated that it had cooperated with the SEC’s investigations and engaged in settlement talks, but the SEC chose to litigate instead. The lawsuit though was long predicted, as reported by CoinGape in early May.

Binance.US posted its own public statement to its Twitter account, condemning the SEC’s enforcement and calling on Congress to create “workable regulation” for digital assets.

“Simply put, today’s filing is unjustified by the facts, by the law, or by the Commission’s own precedent,” said Binance.US. “The relief sought by the Commission would harm the very investors the SEC is charged with protecting.”

Like Binance, it said it plans to defend itself vigorously, but remains open to a “productive compromise.”