The US government requested last week to modify the bail conditions of Binance founder Zhao Changpeng (CZ) before his sentencing, including requirements such as reporting travel plans and passport custody. However, CZ’s lawyers refused the request. Meanwhile, the US Securities and Exchange Commission (SEC) accused Binance.US of non-cooperation in providing crucial information and requested court intervention.
Last week, Binance reached a historic settlement agreement with the US Department of Justice, the Commodity Futures Trading Commission (CFTC), and other institutions. Binance admitted guilt and agreed to pay a $4.3 billion fine, while founder CZ acknowledged charges of violating US anti-money laundering laws, resigned as CEO of Binance, and paid $175 million for bail. However, his multiple requests to return to his home in the United Arab Emirates 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 filed a court document on the first day, stating that the government wanted CZ and his defense team to report his travel plans, as they were concerned that CZ, as a Canadian citizen, might travel to the US-Canada border. The government also requested CZ to surrender his Canadian passport to a “third-party custodian employed and supervised by his registered attorney,” which would prevent CZ from applying for or receiving a new passport.
However, CZ’s defense team requested the judge to reject the government’s modification order, arguing that CZ’s previous travels to the US had not been an issue. Additionally, the government’s request for CZ to maintain his residence was also opposed by CZ’s lawyers, with the government arguing that it was a “standard, common-sense request” and CZ could not be exempted.
Despite reaching a settlement agreement with multiple regulatory institutions, including the US Department of Justice and the CFTC, and receiving court approval for the agreement on March 24, the ongoing lawsuit with the SEC remains unresolved. The SEC filed a lawsuit against Binance and CZ in June last year, alleging violations of US securities laws and presenting 13 charges, including operating an unregistered exchange and illegally offering and selling securities to US investors.
According to Cointelegraph, in a court document made public on the 5th, SEC lawyers told the judge that BAM Trading Services (operating as Binance.US in the US) had not cooperated with the ongoing investigation and had failed to provide sufficient information regarding the custody of customer assets. The institution requested court intervention to expedite the evidence-gathering process. SEC lawyers wrote, “The core of the SEC’s investigation is whether non-US employees of Binance have retained access to Binance.US customer assets.” The SEC claimed that Binance.US had failed to demonstrate that Binance globally could not access private keys or customer assets in any other form.
In its report, Binance.US refuted the SEC’s allegations, stating that it had complied with all “extensive” information requests from regulatory institutions and argued that the SEC’s demands for information exceeded the scope of the agreed expedited discovery order from June last year, requesting the court to end the expedited discovery process.
Binance is still seeking the dismissal of the SEC lawsuit, but the judge has not yet agreed. However, the legal battle with the SEC has caused Binance.US to face a “collapse” situation.
According to Fortune, Christopher Blodgett, the Chief Operating Officer of Binance.US, revealed in his testimony on Tuesday that the company had been forced to lay off over 200 employees, or two-thirds of its workforce, since June due to the SEC’s actions. In the document, he described the lawsuit and restraining order as a “near-fatal blow” that weakened the platform’s ability to find partners, including banks and market makers. In the months following the lawsuit, the number of partners decreased from over 20 to less than 5. In August last year, due to the suspension of payment and banking partnerships supporting the exchange’s USD deposits and withdrawals, the platform turned to cooperation with MoonPay for USD deposits.
Related Reports
CZ’s legal team guarantees no escape from the US! Zhao Changpeng: Want to resolve the issue; otherwise, I wouldn’t be here.
Binance.US trading volume evaporates 99% in six months! Only three paths left for Binance.US’s future.
Who is BAM Trading Services, owned by CZ? Why does the SEC want to freeze assets? Understand Binance.US’s strategic layout in one article.