The U.S. Securities and Exchange Commission (SEC) has reportedly been seeking alternative means to serve legal papers to Binance and its CEO, Changpeng Zhao (CZ), due to the elusive nature of their locations. According to a legal filing, the SEC has observed that Binance and CZ are unlike typical foreign entities and individuals, as they do not publicly share the locations of their headquarters or domicile. In response, the SEC suggested sending copies of legal documents to the attorneys representing each party.
CZ is well-known for keeping his whereabouts confidential and has previously claimed that Binance’s choice to avoid establishing headquarters in a specific jurisdiction contributes to its resilience. In a blog post last year, CZ described how Binance transitioned to a remote working model that invites global workers, following China’s crackdown on cryptocurrency exchanges in 2017. Though CZ was born in China, he is a Canadian citizen and has emphasized that Binance is neither a Chinese company nor has any legal entities in the country.
The SEC’s pursuit of alternative methods to serve legal papers comes amid a 136-page lawsuit filed against Binance, containing multiple accusations encompassing securities violations and market manipulation. One such allegation suggests that Binance and CZ covertly control their American subsidiary, Binance US, despite its supposed independence.
Reacting to these allegations, the SEC filed a restraining order against Binance US, mandating asset freezing, customer repatriation, and the transfer of all crypto holdings to wallets with new private keys within 30 days. The regulator also claimed that both Binance and CZ-owned companies have commingled customer funds across various bank accounts, such as those held with Silvergate Bank and Signature Bank. This accusation was supported by accounting details provided in a Wednesday filing, which revealed hundreds of millions of dollars from each platform moving through Zhao-owned firms.
This situation raises concerns regarding the transparency of large cryptocurrency exchanges and accentuates the importance of a regulatory framework. However, it is worth noting that these allegations have yet to be proven in court, and the outcome remains uncertain. On one hand, such regulation can protect consumers and instill confidence in the market; on the other hand, it may curb innovation or lead to overreach by regulators. What we do know is that the outcome of the SEC’s lawsuit against Binance will undoubtedly shape the future of crypto regulation and exchange operations worldwide.
Source: Cryptonews
