The US government requested last week to modify the bail conditions of CZ, the founder of Binance, before his sentencing, including requirements such as notifying travel plans and passport custody. However, CZ’s lawyers refused the request. Meanwhile, the US Securities and Exchange Commission (SEC) accused Binance.US of not cooperating in providing crucial information and requested court intervention.
Summary:
Obstacles in the bull market cleared! Court approves settlement agreement for Binance and CZ, requiring a $2.7 billion fine to be paid to the CFTC, with hidden clauses?
Background:
Binance settles for $4.3 billion! Court approves guilty plea agreement, leaving only the SEC lawsuit battleground.
Table of Contents:
1. US government requests modification of CZ’s bail conditions
2. SEC accuses Binance.US of non-cooperation in providing crucial information
3. Binance.US experiences a 75% drop in revenue after SEC lawsuit
Binance reached a historic settlement agreement with the US Department of Justice, the Commodity Futures Trading Commission (CFTC), and other institutions in November last year, admitting guilt and agreeing to pay a $4.3 billion fine. Founder CZ acknowledged charges of violating US anti-money laundering laws, resigned as CEO of Binance, and paid $175 million for bail. However, his repeated requests to return to his home in the UAE were rejected by the court.
According to Blockworks, the US government sought to modify CZ’s bail conditions before his sentencing hearing in April. The Department of Justice stated in a court document on the 1st that it wished for CZ and his defense team to notify the prosecution of his travel plans, as they were concerned that CZ, as a Canadian citizen, would travel to the US-Canada border. The government also requested that CZ hand over his Canadian passport to a third-party custodian hired and supervised by his registered lawyer, which would prevent him from applying for or receiving a new passport.
However, CZ’s defense team requested the judge to reject the government’s modification order, stating that CZ’s travel to the US had not been an issue so far. In addition, the government requested CZ to maintain his residence, but this request was also opposed by CZ’s lawyers. The government argued that it was a “standard, common-sense request” and that CZ could not be exempted.
Despite reaching a settlement agreement with several regulatory institutions such as the US Department of Justice and the CFTC, which was approved by the court on March 24th, the ongoing lawsuit between Binance and the US Securities and Exchange Commission (SEC) remains unresolved. The SEC sued Binance and CZ for violating US securities laws since June last year, presenting 13 charges, including operating an unregistered exchange and illegally offering and selling securities to US investors.
According to Cointelegraph, in a court document publicly released on the 5th, SEC lawyers informed the judge that BAM Trading Services (Binance’s US entity operating as Binance.US) did not cooperate in the ongoing investigation and failed or refused to provide sufficient information regarding the custody of customer assets. As a result, the institution requested court intervention to expedite the gathering of evidence. The SEC lawyer wrote:
“The core of the SEC’s inquiry is whether Binance employees, who are not part of its US subsidiary, retain control over Binance.US customer assets. The SEC claims that Binance.US has failed to show that Binance globally lacks access to private keys or other means of accessing customer assets.”
In its report, Binance.US refuted the SEC’s allegations, stating that it had complied with all “extremely broad” information requests made by regulatory institutions. It also claimed that the SEC’s demands for information went far beyond the scope of the June court order for expedited discovery, and requested the court to terminate the expedited discovery process.
Binance continues to seek the dismissal of the SEC lawsuit, but the judge has not yet agreed. However, the legal battle with the SEC has left Binance.US in a dire situation.
According to Fortune, Christopher Blodgett, the COO of Binance.US, revealed in his testimony on Tuesday that the company had been forced to lay off over 200 employees, two-thirds of its workforce, since June due to the SEC’s actions. He described the lawsuit and restraining order as a “near-fatal blow,” weakening the platform’s ability to seek partners, including banks and market makers. In the months following the lawsuit, the number of partners decreased from over 20 to less than 5. Since August last year, Binance.US has partnered with MoonPay for USD deposits due to the suspension of payment and banking partnerships supporting USD deposits and withdrawals on the exchange.
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