The focus of the crypto market is the US Securities and Exchange Commission’s lawsuit against Binance this week. The SEC has filed a lawsuit against crypto exchange Binance and its CEO, Changpeng Zhao, with various allegations. Now CZ on the defense side of the case is responding to some of these claims.
Binance CEO denies user fund transfer allegations
cryptocoin.comAs you follow, the SEC is increasing its pressure on the cryptocurrency exchange Binance. Accordingly, the exchange even issued a subpoena against the CEO of the exchange, Changpeng Zhao (CZ). One of the SEC’s allegations was that CZ diverted client funds to a company called Merit Peak. Binance CEO revealed on Thursday that allegations that the crypto exchange is diverting as much as $12 billion of user funds to other companies the CEO controls are untrue.
Meanwhile, US Senators Elizabeth Warren and Chris Van Hollen have urged the US Department of Justice to investigate crypto exchange Binance, following a complaint from the US Securities and Exchange Commission (SEC). The SEC lawsuit includes allegations that Binance mixed investor funds with the company’s own funds. In addition, the SEC claims that it offers and sells unregistered securities. Interestingly, this lawsuit was followed by another prominent crypto exchange, Coinbase.
Binance CEO clarifies about user funds
Changpeng Zhao explained the reason for the drop in user funds in response to the SEC lawsuit. CZ stated that all user funds were accounted for and were never allocated in an unauthorized manner. In this context, Zhao made the following statement:
As far as I know, Binance.US had around $2 billion in total user funds. All user funds are accounted for. It has never left the Binance.US platform (unless users withdraw themselves).
Binance CEO has attached the tag “4” to this claim, meaning news that causes “fear and uncertainty”. Moreover, CZ said that the SEC lawsuit is an attack on the entire crypto market, not just the stock market.
SEC Chairman Gary Gensler questions the crypto industry
SEC Chairman Gensler has targeted Binance and Coinbase in his recent statements surrounding crypto. In line with this, Gensler urged crypto projects to comply with regulations. Gensler argued that assets and exchanges in the crypto market are not exempt from regulation, thus refuting claims that tokens provide benefits and can avoid being classified as securities. “Some additional benefits do not exclude a crypto-asset security from the definition of an investment contract,” the chairman emphasized. Gensler also noted that to ensure compliance, crypto issuers must register their investment contracts with the SEC. Or pointed out that they must meet the requirements for an exemption.
During his talk, Gensler also highlighted the agency’s previous guidance to crypto projects and brokers, including the DAO report from 2017 and the staff’s ‘Framework for ‘Investment Contract’ Analysis of Digital Assets in 2019. Citing key lawsuits related to Telegram, LBRY and Kik, Gensler noted that more than 100 Commission decisions, adjudicated actions, and court orders clarified the circumstances under which a token offering constitutes a security.
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