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Third Day of Crypto Crackdown Continues With SEC Summons of Binance CEO

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13 comments on Third Day of Crypto Crackdown Continues With SEC Summons of Binance CEO

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SEC Summons

Here is a link to the SEC Summons on Binance.

Zhao, the CEO of Binance does not have to appear in person, but he does have to answer withing 21 days.

The SEC informs Zhao “If you fail to respond, judgment by default will be entered against you for the relief demanded in the complaint.“

Mish Three-Point Binance Synopsis

  1. The SEC says Binance is an illegal, unregistered entity that repeatedly broke federal securities laws and commingled client funds into accounts and corporate relationships controlled by Zhao, Binance’s Chief Executive Officer.
  2. The SEC seeks to freeze all the assets at Binance
  3. The SEC seek to “disgorge their ill-gotten gains with prejudgment interest”

For details of the charges, please see The SEC Seeks to Freeze Binance Assets, Bitcoin Dives Six Percent.

Third Day of SEC Crackdown on Crypto 

  • The SEC filed the law suit against Binance on Monday.  
  • On Tuesday, the SEC filed a lawsuit against Coinbase.
  • Today, we see a summons on Binance. 

Coinbase is publicly trade. Its share price and bonds collapsed.

Coinbase Bond Collapse to Deep Junk

  • The company’s 3.375% notes due in 2028 recently traded at 59 cents on the dollar, down from 64.5 cents on Monday, according to MarketAxess.
  • The bonds are now trading at a yield of more than 10 percentage points above Treasury bonds.

Key Lawsuit Difference

  • The SEC accused Binance of illegally trading unregistered securities, commingling client funds, wash trading to inflate values, fraud, misrepresentation, purposeful evasion, and it went after Zhao, the founder of Binance, personally.
  • The SEC primarily accuses Coinbase of illegally trading unregulated securities which it seeks to stop.
  • The SEC seeks to freeze the assets of Binance, not Coinbase. 

In both cases, the SEC wants the companies to “disgorge their ill-gotten gains with prejudgment interest”.

What’s It Really About?

In my first Binance post, I asked “It is reasonably clear that Binance broke many security laws. But is that what’s this is really all about?“

If it wasn’t clear before, it is now. The SEC wants to end crypto exchanges, and promote Central Bank Digital Currencies.

That does not mean the the attack on Binance is unjustified, but understand the real motive. 

For further discussion of Coinbase and the SEC’s motive please see Coinbase Shares Plunge in Response to Second SEC Lawsuit Against Crypto Exchanges

This post originated on MishTalk.Com.

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13 Comments
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FDR
FDR
3 years ago
So the Binance founder is a cheat, got caught and has to pay the piper. Didn’t he think to hire a criminal, securities and tort lawyers that are connected, or advise him where he is liable or bribe a president, congress, and provide speaking fees to Yellen? Stupid is as stupid does.
The regulators are bought and paid for by the industry that they are supposed to keep an eye on. In this case the SEC is doing the work for Godfather Jaime Dimon and the criminal family under ticker symbol JPM. It is also doing the work for Biden, Yellen, and Powell at the government level or quasi government level to pay off either donor base or to keep that revolving door turning.
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Cocoa
Cocoa
3 years ago
The Government and FED suckertrapped the crypto folks, you could see it a mile away. Basically allowing for the rough sports to get ironed out in the technology and then steal the business. The only way out of the CBDC jail is barter. Very quiet person to person transactions. The US is so up to it’s neck in moral hazard…
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JRM
JRM
3 years ago
Mounting proof that the FED/Treasury are trying to “WIPE OUT” their opposition!!!
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prumbly
prumbly
3 years ago
Surely it was obvious from the start that the government would not tolerate a system for genuinely private financial transactions that they could not control??? Why is anyone surprised by this? The only surprise (to me) is that they let it run for so long.
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BDR45
BDR45
3 years ago
Reply to  prumbly
I think it has gone on long enough to convince the Treasury department that electronic money is widely acceptable by the citizenry.
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randocalrissian
randocalrissian
3 years ago
Only a really gulllible person would believe they’ve been looking at COIN and CZ for a long time and only just now found the silver bullet to charge BOTH of them essentially simultaneously. We aren’t that dumb.
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Captain Ahab
Captain Ahab
3 years ago
It seems to me that the primary purpose behind offering (supposedly) untraceable economic transactions is tax avoidance. If so, these companies may have a far bigger problem. We can rest assured; however, that the gov’t approved crypto currency will be entirely traceable from start to conviction.
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Doug78
Doug78
3 years ago
If Binance had followed the laws then they would not have had a problem but they didn’t and so they do. The pattern we are seeing with a lot of these companies is that they seem to feel that laws do not apply to them for some reason. I think they believed that they could “innovate” faster than the law could catch them. Probably if they had followed the laws they would not have been able to gain the personal wealth that they had accumulated. I am not really for or against the cryptos personally but you must admit that there is a surprising amount of sheer criminality that swirls around that whole sector.
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TexasTim65
TexasTim65
3 years ago
Reply to  Doug78
It’s only my opinion but I suspect most of these did not start out with the intention of being criminals or scamming people but rather with the idea of creating something new and game changing.
But like every venture in history before it, as soon as vast sums of money were being made it attracted all kinds of criminal types wanting to get a cut by shady means. Virtually all the stable coins and exchanges seem to fit into the latter category (created by criminal types) while the original ideas behind crypto itself were the former.
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Doug78
Doug78
3 years ago
Reply to  TexasTim65
You are describing how greed kicks in. These companies from the start wanted lax accounting and no controls because they wanted total freedom to do what they want. It didn’t just “happen”. It was set up that way. Now they are caught they use the good-intentioned nice genius defense. That won’t fly. The SEC took their time to build the case. They knew what they were doing all along.
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Matt3
Matt3
3 years ago
Government must maintain a monopoly on currency.
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Captain Ahab
Captain Ahab
3 years ago
Reply to  Matt3
Monopoly is one part of the issue. The other part is traceability, or lack thereof.
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prumbly
prumbly
3 years ago
Reply to  Matt3
Not “must”, “wants to”. Above all, governments want power over everything and everyone.
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