Former SEC executive says U.S. DOJ likely to bring criminal charges against Binance

Former SEC Executive holds the belief that Binance’s legal issues are poised to intensify. According to John Reed Stark, the U.S. Department of Justice is probably working discreetly to prosecute Binance and its executives on criminal charges.

Former SEC executive says U.S. DOJ likely to bring criminal charges against Binance

John Reed Stark, the former head of the Securities and Exchange Commission (SEC) Office of Internet Enforcement, holds the belief that Binance’s legal troubles are set to deteriorate. According to Stark, the U.S. Department of Justice is likely operating discreetly to pursue criminal charges against Binance and its executives.

In March, Binance and its CEO, Changpeng Zhao, were confronted with a lawsuit by the Commodity Futures Trading Commission (CFTC). Recently, the Securities and Exchange Commission (SEC) filed a separate lawsuit against the exchange and Zhao.

Having worked in the US SEC Enforcement Division for almost 20 years and managed many US SEC-DOJ joint prosecutions, IMHO [in my honest opinion], there exist a litany of indicators that US DOJ will file, or has already filed under seal, a Binance-related criminal indictment.

John Reed Stark

Stark stated that the lawsuits filed by both the CFTC and the SEC against Binance contain numerous allegations of fraud, deception, obstruction of justice, and money laundering, resembling criminal indictments.

According to the CFTC complaint, several criminal actions were outlined, including the involvement of Binance’s senior executives in assisting U.S. customers in bypassing compliance controls.

For example, as mentioned in the CFTC complaint, Binance executives informed U.S. users that their inability to access the exchange’s international platform was solely due to their IP address, suggesting that they could utilize a virtual private network to access Binance.com.

Furthermore, a Binance executive allegedly provided advice to users on engaging in illicit activities to avoid detection.

Like the CFTC action, the SEC also alleges that Zhao designed, implemented and engaged in an extensive web of deception, conflicts of interest, lack of disclosure, and calculated evasion of the law.

John Reed Stark

The charges of utmost concern pertain to money laundering. As per the SEC complaint, Binance entities and Zhao allegedly mixed user funds with their own for personal gain. The lawsuit further claimed that Zhao employed a company to artificially inflate Binance’s value through extensive market manipulation activities.

The SEC aims to freeze the assets of entities controlled by Zhao and also intends to repatriate the funds held in offshore entities controlled by him back to the United States.

Seeking such emergency relief typically means that the SEC believes they can convince a judge right now, that the defendants have committed fraud and that investor funds are at risk.

John Reed Stark

Stark mentioned that the SEC is clearly collaborating with criminal prosecutors and FBI agents, even though no specific details have been disclosed as of yet. He stated that neither the CFTC nor the SEC complaint extensively concentrates on money laundering since that falls within the jurisdiction of DOJ prosecutors.

My take is that U.S. DOJ is working with the SEC, CFTC and multiple informants/whistleblowers, and the next axe to fall is the filing, or unsealing of, Binance-related criminal charges.

John Reed Stark

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