John Reed Stark, president of John Reed Stark Consulting and a former SEC Enforcement Division member, speculates on the likelihood of a criminal indictment being filed against Binance.
Stark cites evidence that led to a sealed indictment against Binance for fraud, obstruction of justice, and possible money laundering being filed by the U.S. Department of Justice (DOJ).
Stark stresses that the CFTC and SEC charges are similar to indictments alleging illegal behavior such as fraud, deceit, obstruction of justice, and even possible money laundering.
Stark argues that the U.S. Department of Justice (DOJ) would have jurisdiction over money laundering accusations, whereas the CFTC and SEC operations are focused exclusively on civil enforcement.
Stark speculates that criminal charges will soon be filed against Binance by the Department of Justice (DOJ), the Securities and Exchange Commision (SEC), the Commodity Futures Trading Commision (CFTC), and other informants or whistleblowers.
A 76-page lawsuit was recently filed by the U.S. Commodity Futures Trading Commision (CFTC) against Binance, alleging breaches of several CFTC rules and regulations by Binance CEO Changpeng Zhao and three corporations managing the Binance platform.
The lawsuit also claims that former Binance chief compliance officer Samuel Lim conspired to help and abet these offenses. According to the CFTC’s findings, Lim deliberately assisted specific clients in engaging in illegal actions and counseled others on how to evade compliance safeguards.
Binance has also been hit with an emergency asset freezing action brought by the U.S. Securities and Exchange Commision (SEC).
The 136-page lawsuit alleges that Binance Enterprises and Changpeng Zhao placed investor assets at severe risk by mixing customer cash with company funds and then surreptitiously transferring the funds to Zhao-controlled firms.
The SEC claims that Zhao’s company, Sigma Chain, engaged in market manipulation and that there were substantial cash transfers between firms controlled by Zhao.
With continuing investigations and the possibility of unsealing criminal charges by the US DOJ, the situation involving Binance is far from stable. The result of these lawsuits will have far-reaching consequences for Binance and the cryptocurrency industry as a whole.