The Securities and Exchange Commission (SEC) has countered Binance for blatant disregard of the federal securities laws.
The United States Senators Chris Van Hollen (D-Md.) and Elizabeth Warren (D-Mass.) have written to Attorney General Merrick Garland asking the Department of Justice (DOJ) to conduct an investigation into allegations that the cryptocurrency exchanges Binance and Binance.US made a number of false statements to Congress.
The request of both senators who are also members of the Senate Banking Committee, to the DOJ follows a filed complaint by the Securities and Exchange Commission (SEC) against Binance for “blatant disregard of the federal securities laws and the investor and market protections these laws provide.”
According to the Senators in a letter, “Binance and Binance.US made two representations to Congress: that Binance and Binance.US were ‘separate entities,’ and that Binance.US ‘prioritised regulatory compliance’ and had ‘best-in-class compliance function.’ If the allegations in the SEC filing are accurate, then it would appear that neither of these claims are true.”
Senators Warren, Van Hollen, and Roger Marshall (R-Kan.) had earlier written to the CEOs of Binance and Binance.US on March 1, 2023, requesting information about the companies’ operations, policies, and structure to ensure compliance with anti-money laundering, counterterrorism financing, and know-your-customer laws.
Contrary to claims by both Binance and Binance.US that they are separate entities, the SEC’s filing read, “(Binance CEO Changpeng) Zhao and Binance created BAM Management and BAM Trading in the United States and claimed publicly that these entities independently controlled the operation of the Binance.US Platform. Behind the scenes, however, Zhao and Binance were intimately involved in directing BAM Trading’s U.S. business operations and providing and maintaining the crypto asset services of the Binance.US Platform.”
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Also, Binance had claimed that it has “prioritised regulatory compliance” and that “Protecting our customers and providing the best possible experience has been BAM Trading’s primary goal. These efforts are grounded in a best-in-class compliance function.”
But again, the SEC’s filing countered Binance’s claims, saying, “When the Binance.US Platform launched in 2019, Binance announced that it was implementing controls to block U.S. customers from the Binance.com Platform. In reality, Binance did the opposite. Zhao directed Binance to assist certain high-value U.S. customers in circumventing those controls and to do so surreptitiously because—as Zhao himself acknowledged—Binance did not want to ‘be held accountable’ for these actions.”
Responding to the SEC’s observation, Senators Warren and Van Hollen expressed disappointment from Binance and Binance.US for undermining their investigations.
According to them, it is a violation of the law that could lead to penalties including fines and jail time.
“This is a serious matter. In this case, a bipartisan group of senators was seeking information on the cryptocurrency industry in order to inform an ongoing legislative process and determine whether new laws are needed to address the risks from cryptocurrencies and cryptocurrency exchanges and it appears that Binance and Binance.US undermined this important investigation and the legislative process by providing false and misleading information to Congress. These actions by Binance and Binance.US represent a potential violation of federal law that may subject company officials to fines and imprisonment, and the Department should, in conjunction with the ongoing SEC complaint, conduct a rapid and thorough investigation of this matter.”
