SEC Eyes Binance US in FTX-Style Fraud Investigation

SEC is still investigating whether Binance and its founder have a backdoor to control assets on Binance.US, allowing potential fraud like with FTX
SEC lawsuit initially focused on concerns Binance could expropriate US crypto assets, though recent DOJ case did not include asset misuse allegations
SEC looking for proof of potential fraud at Binance.US specifically, pressing for evidence Binance/Zhao can misuse customer funds on the platform

The Securities and Exchange Commission (SEC) is still looking for evidence that Binance and its founder Changpeng Zhao may have a backdoor to control assets stored on the Binance.US platform. This comes after the SEC sued Binance and Binance.US in June over allegations they operated illegal securities exchanges.

🚨 NEWS: 🇺🇸 SEC is actively investigating Binance US for FTX-style misuse of customer assets, reports WSJ.
— BlockNews.com (@blocknewsdotcom) November 27, 2023

Background on SEC Lawsuit

The SEC’s lawsuit so far has hinged on the agency’s concerns about the potential for Binance to expropriate American crypto assets in an FTX-style fraud. Binance and Zhao last week pleaded guilty to criminal charges and resolved long-running US investigations related to anti-money laundering controls and compliance with sanctions laws. However, the Justice Department’s case did not include allegations that Binance misused the crypto assets of its customers.

Ongoing SEC Investigation

The SEC is still pressing for evidence of potential fraud at Binance.US. Specifically, the agency is looking for proof that Binance and Zhao have a backdoor to control assets stored on the Binance.US platform. This would allow them to potentially misuse or steal customer funds, similar to what happened with FTX. The SEC’s civil investigation into Binance is ongoing even after the resolution of criminal charges related to money laundering and sanctions violations.

Conclusion

In summary, the SEC continues to investigate potential fraud and misuse of customer assets involving Binance.US and its parent company Binance. This is part of the SEC’s broader crackdown on illegal practices in the cryptocurrency industry in order to protect investors. The outcome of the investigation remains to be seen as the SEC gathers more evidence related to the security of assets on Binance.US.

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