Here is a short but detailed BREAKDOWN of the 136-page SEC’s complaint against Binance and CZ.

ARTICLE STRUCTURE

• Defendants Name

• SEC’s Allegations

• Binance-related company scheme (ownership & location)

• requested remedies by SEC

• Conclusions

• More details

DEFENDANTS

The complaint names four defendants:

• CZ aka Changpeng Zhao

• Binance Holdings Ltd.

• Bam Trading Services Inc.

• Bam Management US Holdings INC.

ALLEGATIONS

It consists of allegations regarding a.i.:

• operating unregistered trading platforms

• selling & promoting unregistered securities

• defrauding investors

• manipulative trading

• false statements

• combining the roles of CEX, broker-dealer & clearing agency

BINANCE-COMPANY SCHEME (LOCATION & OWNERSHIP)

The SEC claims that CZ is a 100% owner of Binance Holdings Limited, CPZ Holding, and a few other companies including the one controlling Coinmarketcap.

See the picture below:

The company schemes described by SEC in the complaint consist of companies located in:

• Cayman Islands

• British Virgin Islands

• Delaware

• Switzerland

  & a New York-based and Nevada-based trust companies

BREAKDOWN OF THE SEC’s ALLEGATIONS

The SEC claims that two important companies of Binance Corporate Group Bam Trading Services Inc, and Bam Management US Holdings Inc. were “virtually non-existent”.

The two “BAM” named companies were created by Binance to independently control the operation of the Binance.US Platform.

But according to the SEC, it was just an element of the multi-step plan designed and implemented by CZ to surreptitiously evade U.S. laws.

The document alleges that these two companies made misrepresentations to the investors about the US version of the Binance platform.

According to the SEC, Binance never implemented controls the two companies claimed Binance US did, attracting 200M in investors' funds and billions in trading volume.

The document claims that Binance failed to implement on the Binance.US Platform the trade surveillance or manipulative trading controls BAM Trading and BAM Management advertised to investors.

On top of that, the SEC claims that CZ and Binance lied about prohibiting US citizens from using a global version of the Binance platform.

The SEC claims that Binance assisted high-value US customers in circumventing controls so that they could use the global version of the Binance platform.

According to the SEC Binance evaded U.S. regulations, risking billions in investor capital.

The SEC claims that CZ had his incognito Binance account for a company named “Merit Peak Ltd” to freely manipulate funds.

REQUESTED REMEDIES

The SEC wants a judgment that:

• permanently stops Binance from violating securities laws,

• orders disgorgement of ill-gotten gains with INTERESTS,

• imposes civil penalties, and

• provides equitable relief for investors.

CONCLUSIONS

In short: If Binance loses this battle with SEC, it will be bankrupt due to the substantial amount of money involved, including accrued interest.

What is striking is the text of private messages between CZ and Binance workers included in the complaint.

It provides evidence that the US might have used powerful surveillance tools to obtain the information.

There are more interesting details included in this document.

I will keep picking out the juiciest details relevant to the whole BLOCKCHAIN INDUSTRY from the complaint and will publish a separate article in this newsletter.

LET’s CONNECT

I am Jack.

I am an ex-lawyer and the founder of a web3 project.

I spent thousands of hours analyzing web3 projects, in particular in the NFT space and building my own venture.

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