SEC Veteran Predicts Binance-DOJ Plea Deal Will Collapse

In a recent post on X, SEC veteran John Reed Stark shared a compelling perspective on the fate of Binance Exchange’s Department of Justice (DOJ) plea deal, predicting its inevitable collapse.

Exhibit Emerge in Binance Exchange’s Plea Deal

Stark drew attention to three crucial exhibits within the docket which include the “Statement of Facts” admitted by Binance, the “Compliance Commitments,” and the role of the DOJ “Compliance Monitorship.” 

The sheer breadth and scope of the DOJ monitorship, coupled with compliance commitments and the involvement of the U.S. Financial Crimes Enforcement Network (FinCEN), stands out as unprecedented in the oversight of a global financial firm.

Stark pointed out that the newly revealed compliance commitments read like a consulting firm’s wish list, estimating the implementation and execution costs to be in the tens or hundreds of millions of dollars. The DOJ Compliance Monitor’s mandate spans various divisions within the DOJ, indicating a comprehensive post-plea engagement that involves the Money Laundering, Asset Recovery, National Security, Counterintelligence, and Export Control Sections.

Another critical element highlighted by the SEC veteran is the level of cooperation required from Binance. The company must grant the monitor access to documents, resources, and personnel and report any potential misconduct promptly. However, the monitor may, under certain circumstances, opt not to inform Binance about its findings, reporting directly to the government instead.

SEC Leveraging Plea Deal

Stark went on to discuss the SEC’s swift incorporation of the facts admitted in Binance’s $4.3 billion settlement with the DOJ, FinCEN, and the Commodity Futures Exchange Commission (CFTC). Despite not being part of the plea agreement, the SEC also recently filed a “Notice of Supplemental Authority,” urging the court to consider these new accusatory facts in the ongoing litigation against Binance and Changpeng ‘CZ’ Zhao, former CEO of the firm.

Overall, Stark’s assessment of the impending collapse of the plea deal revolves around the monumental challenges Binance faces with the simultaneous oversight from the DOJ, FinCEN, and the SEC. 

The exhaustive monitorships and compliance commitments, coupled with the SEC’s ability to leverage the plea agreement in its case, paint a bleak picture of Binance’s ability to transform into a compliant and law-abiding financial entity.