SEC still looking for potential FTX-style fraud at Binance.US: Report
The United States Securities and Exchange Commission is still looking for evidence that Binance.US had a backdoor to potentially control customer assets in a similar style to FTX, according to a Nov. 27 report by the Wall Street Journal.
In June, the SEC filed a lawsuit against Binance and Binance.US, alleging that the exchange was involved in the sale of unregistered securities and accused Binance and its founder of participating in a complex conspiracy that involved fraud, conflicts of interest, a lack of disclosure and willful disregard for the law.
One of the allegations was that the exchange diverted customer assets at their discretion, including sending money to the Switzerland-based Sigma Chain under that was Zhao’s control.
During a Nov. 27 hearing in federal court, attorneys for Binance.US reportedly argued the securities regulator has no evidence that assets have been misused, asking U.S. Magistrate Judge Zia Faruqui to consider ceasing the securities regulator’s investigation for potential fraud.
Binance.US attorney Matthew Laroche also cited ballooning costs of the lawsuit, noting that Binance.US assets have plunged almost 90% and that its user base has halved since the SEC filed the lawsuit.
The request came as Binance and CZ agreed to plead guilty to breaking U.S. anti-money laundering laws as part of a $4.3 billion settlement with the U.S. Justice Department, Treasury and Commodity Futures Trading Commission (CFTC) last week.
However, the U.S. Justice Department’s case didn’t include any of the SEC’s fraud-related claims stemming from its lawsuit with the cryptocurrency exchange in June.
Binance.US, SEC asked to resolve dispute
Judge Faruqui, who is presiding over the Binance and SEC case, reportedly said the guilty pleas make it less likely that Binance.US and CZ misappropriated customer assets.
“At some point, I have to make a leap of faith and say enough is enough,” Faruqui reportedly told the SEC’s lawyers.
Faruqui has asked Binance.US and the SEC to resolve the dispute and update him by Dec. 15.
Related: Binance CEO CZ’s downfall is ‘the end of an era’ — Charles Hoskinson
Meanwhile, CZ is currently awaiting a court review to find out whether he can leave the U.S. now and return two weeks before his sentencing date, scheduled for sometime in February.
The judge ordered that CZ would not be permitted to travel to the United Arab Emirates — where CZ is primarily based — until a court ruled on a motion for review from the U.S. government.
Breaking News: Judge Orders That The Condition Permitting CZ To Return To The UAE Pending Sentencing Is STAYED (i.e. CZ Must Remain in the Continental U.S. For Now)
(See Updated Compendium Below With Links To All Relevant DOJ/Binance/CZ Court Filings)
Yesterday, I predicted… pic.twitter.com/I6MmHkINv2
— John Reed Stark (@JohnReedStark) November 27, 2023
CZ could face up to 18 months in prison under federal sentencing guidelines.
Magazine: US enforcement agencies are turning up the heat on crypto-related crime
Kenya is preparing legislation to regulate cryptocurrencies with a draft proposal open for public feedback until Jan. 24.
According to the US Department of Justice, Wolf Capital’s co-founder has pleaded guilty to wire fraud conspiracy for luring 2,800 crypto investors into a Ponzi scheme.
Making Britain better off will be “at the forefront of the chancellor’s mind” during her visit to China, the Treasury has said amid controversy over the trip.
Rachel Reeves flew out on Friday after ignoring calls from opposition parties to cancel the long-planned venture because of market turmoil at home.
The past week has seen a drop in the pound and an increase in government borrowing costs, which has fuelled speculation of more spending cuts or tax rises.
The Tories have accused the chancellor of having “fled to China” rather than explain how she will fix the UK’s flatlining economy, while the Liberal Democrats say she should stay in Britain and announce a “plan B” to address market volatility.
However, Ms Reeves has rejected calls to cancel the visit, writing in The Times on Friday night that choosing not to engage with China is “no choice at all”.
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The chancellor will be accompanied by Bank of England governor Andrew Bailey and other senior executives.
She will meet with her counterpart, Vice Premier He Lifeng, in Beijing on Saturday to discuss financial services, trade and investment.
She will also “raise difficult issues”, including Chinese firms supporting Russia’s invasion of Ukraine and concerns over constraints on rights and freedoms in Hong Kong, the Treasury said.
But it did not mention whether Ms Reeves would raise the treatment of the Uyghur community, which Downing Street said Foreign Secretary David Lammy would do during his visit last year.
Britain’s Foreign Secretary David Lammy and Chinese Foreign Minister Wang Yi in Beijing. Pic: AP
On Friday, Culture Secretary Lisa Nandy defended the trip, telling Sky News that the climbing cost of government borrowing was a “global trend” that had affected many countries, “most notably the United States”.
“We are still on track to be the fastest growing economy, according to the OECD [Organisation for Economic Co-operation and Development] in Europe,” she told Anna Jones on Sky News Breakfast.
“China is the second-largest economy, and what China does has the biggest impact on people from Stockton to Sunderland, right across the UK, and it’s absolutely essential that we have a relationship with them.”
Read more – Ed Conway analysis: The chancellor’s gamble with China
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Nandy defends Reeves’ trip to China
However, former prime minister Boris Johnson said Ms Reeves had “been rumbled” and said she should “make her way to HR and collect her P45 – or stay in China”.
While in the country’s capital, Ms Reeves will also visit British bike brand Brompton’s flagship store, which relies heavily on exports to China, before heading to Shanghai for talks with representatives across British and Chinese businesses.
It is the first UK-China Economic and Financial Dialogue (EFD) since 2019, building on the Labour government’s plan for a “pragmatic” policy with the world’s second-largest economy.
Sir Keir Starmer was the first British prime minister to meet with China’s President Xi Jinping in six years at the G20 summit in Brazil last autumn.
Relations between the UK and China have become strained over the last decade as the Conservative government spoke out against human rights abuses and concerns grew over national security risks.
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How much do we trade with China?
Navigating this has proved tricky given China is the UK’s fourth largest single trading partner, with a trade relationship worth almost £113bn and exports to China supporting over 455,000 jobs in the UK in 2020, according to the government.
During the Tories’ 14 years in office, the approach varied dramatically from the “golden era” under David Cameron to hawkish aggression under Liz Truss, while Rishi Sunak vowed to be “robust” but resisted pressure from his own party to brand China a threat.
The Treasury said a stable relationship with China would support economic growth and that “making working people across Britain secure and better off is at the forefront of the chancellor’s mind”.
Ahead of her visit, Ms Reeves said: “By finding common ground on trade and investment, while being candid about our differences and upholding national security as the first duty of this government, we can build a long-term economic relationship with China that works in the national interest.”
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