In a recent court filing, the U.S. Securities and Exchange Commission (SEC) has requested the court to consider newly unsealed documents regarding Binance and its former CEO Changpeng Zhao’s (CZ) plea deals with other agencies. The SEC argues that these settlement agreements provide sufficient evidence for the case to be brought forward and challenge Binance and CZ’s attempt to dismiss the case. This move by the SEC demonstrates their determination to hold Binance accountable for their alleged violations.
The SEC aims to leverage the admissions made by Binance and CZ in their plea agreements with agencies like the Financial Crimes Enforcement Network (FinCEN) and the Department of Justice (DOJ). These agreements, as the SEC believes, substantiate their case against Binance. The unsealed documents are regarded by John Reed Stark, former chief of the SEC’s enforcement division, as a “treasure trove” of incriminating evidence related to Binance. Stark suggests that these documents not only reinforce the SEC’s arguments but also weaken Binance’s plea to dismiss the case.
Binance and CZ, in their motion to dismiss, claimed to lack “fair notice” of their regulatory violations. However, their plea agreements with the DOJ contradict this defense. Both Binance and CZ admitted to willfully violating laws, thereby supporting the SEC’s allegations. Furthermore, they acknowledged intentionally serving millions of customers in the U.S., with a significant portion of their user base located in the country. These admissions significantly undermine Binance and CZ’s effort to dismiss the case.
The unsealed documents reveal that Binance will be subjected to an unprecedented level of monitoring and oversight as part of their plea agreement. Fulfilling these extensive compliance obligations could potentially cost Binance a substantial amount, ranging from tens to hundreds of millions of dollars. Stark warns that the rigorous oversight may even spell the end for Binance as a firm. He emphasizes that no other mega-crypto firm or financial institution has ever been subjected to such comprehensive oversight as agreed upon by Binance.
As stipulated in the plea agreement, Binance must retain an independent monitor for a minimum of three years. This monitor will be granted access to all relevant documents, records, and resources. Moreover, the monitor will have the authority to investigate former employees, agents, intermediaries, consultants, and even joint venture partners. This extensive monitoring requirement can be likened to “installing bodycams on every member of a global criminal drug cartel” while making the cartel responsible for the financial burden of surveillance.
The SEC’s request for the court to acknowledge the plea agreements of Binance and CZ demonstrates their determination to proceed with the case against Binance. The unsealed documents provide compelling evidence to support the SEC’s allegations, significantly weakening Binance’s motion to dismiss. The extensive compliance obligations and monitoring requirements outlined in the plea agreements further emphasize the seriousness of the charges against Binance. As the legal battle unfolds, the outcome of this case will surely have significant ramifications not only for Binance but for the broader cryptocurrency industry as well.