There are new developments in the case of the U.S. Securities and Exchange Commission (SEC) v. Binance.
On December 8, on the US legal document website CourtListerner, three detailed documents regarding the settlement between Binance and regulatory agencies such as the US Department of Justice and the Financial Crimes Enforcement Network (FinCEN) were made public. It is worth noting that the submitter was shown as the SEC. , the securities regulator is not on the list of institutions that Binance has settled with U.S. regulators.
In June this year, the SEC filed a civil lawsuit against Binance, accusing Binance of being an unregistered exchange and illegally supplying and selling securities to U.S. investors. The above three documents were officially included in the latest public attachments by the SEC. In the third document, the SEC also requested the judge to conduct judicial determination of a series of "new criminal evidence and facts" in the settlement agreement.
The SEC's "pressure" attitude is obvious, and the agency has always refused Binance's request to withdraw the lawsuit. In response to this, Binance’s new CEO Richard Teng responded in a Chinese community question on December 12 that Binance will resolutely safeguard its position. He did not respond further as the case is still under investigation.
In these three documents disclosed by the SEC, in addition to the fines and confiscations known to the outside world, the "ombudsman influence" on Binance that the outside world is very concerned about is also detailed in these documents.
Documents show that multiple departments under the U.S. Department of Justice and regulatory agencies such as FinCEN will exercise supervision over Binance in the next 3-5 years by hiring third-party monitors. Judging from the responsibilities and qualifications of the inspectors, they are not government officials, but are hired by Binance. Their work mainly involves anti-money laundering (AML) compliance and sanctions compliance.
Richard explained that the core responsibility of the ombudsman is anti-money laundering, which does not involve specific businesses such as Binance’s listed assets, nor will it violate Binance’s principle of protecting user information.
Third-party monitors supervise anti-money laundering and do not involve user information
After Binance reached a settlement agreement with the U.S. Department of Justice, onlookers were surprised by the high fine of $4.3 billion. Non-U.S. users were more concerned about whether the ombudsman who was about to join Binance to exercise supervisory powers would delist Binance. Cryptoassets, users trading cryptoassets have an impact? Will user data be exposed to supervision?
On December 12, Binance CEO Richard Teng responded in an AMA on the Chinese community that the core responsibility of the ombudsman is anti-money laundering. It will not have an impact on Binance’s listing of crypto assets and users’ trading of crypto assets, and will not interfere with Binance’s products. Innovation will not have any impact on Binance’s principles of protecting user information and data.
Richard explained that the ombudsman is not a US government official, but a third-party personnel hired by Binance who meets legal requirements and needs to maintain independence. “The responsibilities are mainly to see whether our anti-money laundering is good or not and whether it meets legal requirements. , have every clause been implemented in accordance with the agreement?”
He mentioned that Binance has invested a lot of money and resources in anti-money laundering over the years. "It is already very advanced by industry standards, but we have no say in it ourselves. When independent monitors come in, they will see it more objectively." Are our efforts living up to our claims?”
Regarding data and privacy issues, Richard emphasized that when any regulatory authorities make investigation requests to Binance, Binance will only cooperate with legitimate law enforcement requests or court orders. “This is the same rule that all current exchanges should abide by. .”
So, is what Richard said true? The three settlement agreement documents between Binance and the U.S. Department of Justice and other regulatory agencies disclosed by the SEC on December 8 just gave a clear answer.
Three documents released on December 8
According to the agreement documents, Binance agreed to hire a third-party monitor to perform its obligations during the term specified in the agreement. Binance and the prosecutorial agency will do their best to complete the selection process of the inspector within 60 working days after the signing of the agreement.
Judging from this cycle, the ombudsman will not start supervising Binance until next year. The term of office required by the Ministry of Justice for the ombudsman will be three years from the date of hire. The term of the inspector required by FinCEN is 5 years, and the two may be the same candidate.
The ombudsman’s primary responsibility is to assess and monitor the company’s compliance with the terms of the agreement, including its compliance with plans, policies, procedures, codes of conduct, systems and internal controls, as well as its anti-money laundering and U.S. sanctions compliance programs to clarify Address and reduce the risk of recurrence of corporate misconduct.
In some cases, the Ombudsman should immediately report possible misconduct directly to the office, not Binance. Possible misconduct includes posing a risk to U.S. national security, public health or safety, or the environment; involving the company's senior management; involving obstruction of justice; or otherwise posing a significant risk.
The Ombudsman is also responsible for assessing and monitoring compliance with the Agreement, including Binance’s senior management’s commitment to and implementation of Binance’s Anti-Money Laundering (AML) and Sanctions Compliance Program, and assessing and monitoring Binance’s compliance with the Office of Foreign Assets Control (OFAC) OFAC), the Commodity Futures Trading Commission (CFTC), and the settlement agreement between Binance and the Department of Justice.
Binance’s compliance commitments in the agreement include: policies, procedures, and internal controls; customer and third-party relationships; anti-circumvention controls; cycle-based reviews; appropriate supervision and independence; training and guidance; comprehensive reporting and investigations; enforcement and discipline; and monitoring, testing and auditing.
Under the agreement, Binance shall use its best efforts to provide the Ombudsman with access to information upon the Ombudsman’s reasonable request, including the company’s “former employees, agents, intermediaries, consultants, representatives, distributors, licensees , contractors, suppliers and joint venture partners”.
It can be seen from this point that the ombudsman’s review authority does not involve ordinary users’ information. It is also mentioned in the document that when multiple departments of the U.S. Department of Justice and FinCEN launched an investigation into Binance, the evidence documents provided by Binance to the investigation department were conducted on the premise of "not violating foreign data privacy."
These three annexes added by the SEC to the case against Binance are more detailed than previously disclosed by the U.S. Department of Justice, FinCEN and other agencies, and the content of the inspector partially confirms the statement of Binance CEO Richard. Strict supervision has objectively resulted in Binance’s anti-money laundering and other compliance compliance being likely to reach a higher level in the industry within at least 3-5 years.
Richard also shared the attitude of some Binance partners two weeks after the incident, “They think this is a good thing. Some partners were very conservative in the past, but now they are willing to cooperate with Binance. The benefits of compliance are emerging, not only In the long run, it will also lead to wider adoption of crypto assets.”
SEC puts pressure again, Binance responds “will defend its position”
In addition to the three documents themselves, the SEC, in the third public document, requested the judge to make judicial determinations on a series of "new incriminating facts" in the settlement agreement.
Obviously, the SEC wants to use this to increase its persuasiveness in the case, hoping that the judge will declare the relevant facts to be true without formally submitting evidence. But the outcome depends on the court's judgment on this civil lawsuit.
On June 5 this year, the SEC filed 13 charges against Binance, including Binance’s sale of unregistered BNB and BUSD tokens, Simple Earn and BNB Vault products and its pledge plan. The SEC also said that Binance did not register its Binance.com platform as an exchange or broker settlement institution.
Judging from the content of the accusation, the core lies in whether Binance violated U.S. securities laws.
In the Binance community AMA on December 12, Richard did not comment further on the case because "the case is still under investigation", but he expressed his attitude, "Binance will resolutely defend its position."
Previously, Binance and its then CEO Changpeng Zhao submitted a motion to the U.S. District Court in September, seeking to withdraw the lawsuit, claiming that the lawsuit filed by the SEC exceeded its scope of authority, mainly because the SEC did not provide cryptocurrency before charging Industry Clear Guidance: In its attempt to assert regulatory authority over the cryptocurrency industry, the SEC has distorted the provisions of securities laws.
On November 7, the SEC counterattacked Binance’s motion to dismiss the lawsuit, saying that no court had adopted Binance’s “misinterpretation of the law.” The SEC accused Binance of “never complying” with federal securities laws and asked the court to reject Binance’s lawsuit. Ann's motion to safeguard the securities legal system.
The “fight” between the SEC and Binance is still ongoing. In fact, in addition to Binance, many companies in the crypto-asset industry have been sued by the SEC for "securities" issues, including Ethereum (which was not recognized as a security in the end), and more recently Ripple and TRON. , the exchange sequence even includes the US-based crypto asset trading platform Coinbase. This case, like the SEC v. Binance case, is still being resolved.
Judging from the closed cases, most SEC lawsuits are civil cases, and most of them end in settlements and fines. It is worth noting that the SEC is not included in the series of settlement agreements between Binance and US regulatory authorities.
In this regard, Binance co-founder He Yize, who also participated in the AMA, said that whether it is facing an investigation by the Ministry of Justice or a prosecution by the SEC, Binance has a dedicated legal department and lawyers to handle it, and when assessing the regulatory impact, " Lawyers also generally believe that the Department of Justice has greater (influence) because it has the power to impose criminal penalties, while the SEC's lawsuit is civil liability."
Both Richard and He Yi, the new Binance partners, seem to be optimistic about the SEC’s lawsuit. However, the direction in which the case will develop remains to be awaited by the U.S. District Court’s decision.
Binance, which has reached a settlement with US regulators, has further repaired its data.
Total wallet assets on Binance Chain returned to pre-incident levels
DefiLlama data shows that the total assets of wallets on the Binance chain are US$73.471 billion, a 15% increase from US$63.504 billion on the day the "settlement case" was disclosed on November 21, and have returned to the level before the incident.
(Disclaimer: Readers are requested to strictly abide by local laws and regulations. This article does not represent any investment advice)
