In a recent turn of events, troubles for Binance are set to increase as it fights legal battles with the United States regulators. Now, joining the cue is the US Department of Justice (DoJ) who is working to bring Binance and its executives to the court.
According to John Reed Stark, former chief of the US Securities and Exchange Commission (SEC) Office of Internet Enforcement, the DoJ is likely working behind the scenes to bring criminal charges against Binance and its executives. Notably, the exchange is already engaged in lawsuits with the SEC and the Commodity Futures Trading Commission (CFTC).
On Monday, in a tweet, Stark stated that there are several indicators that are hinting at a possible action from the DoJ against Binance. He added:
Having worked in the US SEC Enforcement Division for almost 20 years and managed many US SEC-DOJ joint prosecutions, IMHO [in my honest opinion], there exist a litany of indicators that US DOJ will file, or has already filed under seal, a Binance-related criminal indictment.
In March, the CFTC filed charges against Binance whereas the SEC’s lawsuit started last week. Drawing similarities between both, Stark says both the CFTC and the SEC’s lawsuits against Binance “read more like criminal indictments, replete with allegations of fraud, deception, obstruction of justice and money laundering.”
Further, he states that the CFTC complaint alleged several criminal wrongdoings, including that Binance’s senior executives helped U.S. customers circumvent compliance control. For instance, as per the CFTC’s complaint, Binance executives told U.S. users that they could not use the exchange’s international platform solely because of their IP address, indicating that a virtual private network could help them use Binance.com.
Additionally, CFTC alleged that a Binance executive also allegedly advised users to engage in illicit activities to avoid detection. Stark noted:
Like the CFTC action, the SEC also alleges that Zhao designed, implemented and engaged in an extensive web of deception, conflicts of interest, lack of disclosure, and calculated evasion of the law.
Notably, Stark suggests that the more serious charges against the exchange would be those related to money laundering. In the SEC lawsuit, it alleged that Binance entities and Zhao commingled user funds for their own benefit. The regulator’s complaint also alleged that Zhao used a firm to inflate Binance’s value through extensive market manipulation operations artificially.
Additionally, the SEC seeks to freeze the assets of Zhao-controlled entities and wants the funds held in Zhao-controlled offshore entities to be brought back to the U.S. The SEC also filed an emergency motion in the US court to implement the action as soon as possible. According to Stark, such emergency relief typically means that “the SEC believes they can convince a judge right now, that the defendants have committed fraud and that investor funds are at risk.”
The former SEC officer affirmed that the SEC is “obviously working” with criminal prosecutors and FBI agents, although it is yet to reveal any concrete information. Further, he stated that neither the CFTC nor the SEC complaint “intensely focus” on money laundering because it comes under the purview of DOJ prosecutors. Quoting him:
My take is that U.S. DOJ is working with the SEC, CFTC and multiple informants or whistleblowers, and the next axe to fall is the filing, or unsealing of, Binance-related criminal charges.
Notably, the recent news from Stark adds up to the previous news reported by Todayq News. In the start of May, news surfaced that the DoJ’s national security division is conducting an inquiry into whether Binance allowed Russian customers to access the exchange in violation of U.S. sanctions.
While we await any confirmation from the DoJ on this matter, Binance seems to be dealing with numerous lawsuits. As the SEC’s case sparked some concerns within the crypto industry, several actions of Binance have also brought its image into question. However, as the case grows and more information gets spilled there will be a better clarity on the legitimacy of Binance.