While Binance cannot avoid a U.S. class action lawsuit for selling unregistered securities, the exchange’s preferred stablecoin cannot avoid suspicions that it has artificially increased trading volume.
On March 8, the U.S. Court of Appeals for the Second Circuit upheld a lower court’s dismissal of a class action lawsuit filed in April against Binance, founder Changpeng ‘CZ’ Zhao, co-founders Yi He (CZ’s lover), and Roger Wang. I turned it over. 2020.
The lawsuit alleged that Binance has never registered as a broker-dealer or stock exchange with the U.S. Securities and Exchange Commission (SEC), but is nonetheless offering unregistered securities through sales of a number of Ethereum-based tokens, including ELF, EOS, and FUN. , ICX, OMG, QSP, and TRX — launched during the ICO (initial coin offering) craze of 2017-2018.
In May 2022, a federal judge in the Southern District of New York dismissed the lawsuit on the grounds that (a) the statute of limitations had expired and (b) Binance.com is not a U.S.-based exchange and therefore not subject to U.S. securities. law.
An appellate court ruling last Friday overturned that dismissal, saying the plaintiffs “properly asserted that transactions on the Binance exchange are domestic and therefore not extraterritorial, impermissibly subject to federal and state securities laws.” “The parties are bound by a transaction within the United States, and therefore irrevocably liable is imposed within the United States,” the ruling added.
Binance argued that the plaintiffs were attempting to apply U.S. securities laws across borders. The appeals court rejected the transaction because it was “consistent with (the token seller) on (Amazon Web Services) servers located in the United States, making it irreversible.” The plaintiff also “traded on Binance from the United States, and in accordance with Binance’s terms and conditions, purchase orders became irrevocable when sent.”
Binance’s “deliberate efforts to evade the jurisdiction of regulators” prompted the appeals court to propose a scathing response: “Even though the Binance exchange lacks a physical location, the answer to where (buyer and seller) matching takes place is ‘nowhere.’”
Binance’s claim that it does not have an official headquarters also played a role in this ruling. The appeals court noted that “the server issue was a turning point, given that Binance was not registered in any country, claimed to have no physical or official presence at all, and that Maltese authorities, where its nominal headquarters are located, denied any responsibility for regulation.” . Binance.”
The extraterritoriality issue was also similar to his goal. “Because Binance notoriously denies the applicability of other countries’ securities regulatory regimes, and no other sovereign appears to believe that Binance’s exchanges are within its jurisdiction, the application of U.S. securities laws here would result in ‘non-compliance with the applicable laws of other countries. There is no risk of ‘compatibility’. .’”
The appellate court also rejected the timeliness argument, saying, “Plaintiff’s claims arose only after he made the relevant purchases, so claims arising from purchases made during the year prior to filing the lawsuit are timely.”
The case will now be sent back to district court for further argument.
The third verse is identical to the first.
While the appeals court ruling is not directly related to the SEC’s 2023 complaint against Binance.US for offering unregistered securities, it at least puts another reputational nail in the soon-to-be lowered coffin of US-licensed exchanges. The most recent Joint Situation Report, published earlier this month, gives some indication.
The report alerts the U.S. District Court for the District of Columbia that the two parties maintain significant differences on several key issues. This includes the SEC’s ongoing lament that “there are certain key questions that BAM (the body that oversees Binance.US) is unable or unwilling to answer, so the court’s intervention is warranted.”
For example, the SEC said the expedited discovery “casts doubt on BAM’s assertion that it has exclusive control over private keys, customer assets, customer deposits, and related transfers and withdrawals from ‘hot’ (or Internet-connected) wallets.” I insist. Much of the SEC case is based on evidence that CZ and international Binance entities have more control over Binance.US customer assets than Binance.US officials.
Binance.US responded that it “occasionally” contacts international agencies when “technical assistance” is needed, but rejected the idea that this is CZ taking the lead. Binance.US again asked the court to halt the expedited investigation, arguing that the SEC “has not identified the slightest evidence that BAM’s customer assets are unsafe or have been misused or lost in any way.”
Binance.US is a walking dead exchange.
One of the more interesting aspects of the Joint Situation Report is the following excerpt:
Testimony of Binance.US COO Christopher Blodgett, December 2023. Blodgett testified that the exchange’s “general collapse in trading volume and business” was a “near-fatal blow,” according to the SEC’s complaint.
Blodgett argued that the SEC lawsuit has caused “tremendous reputational damage,” as evidenced by the roughly $1 billion worth of cash and digital assets taken out of Binance.US by customers fearing an FTX-style disaster. Revenues fell 75%, operating costs “exploded,” and external legal costs amounted to “around $10 million.”
The SEC lawsuit also “severely undermined institutional confidence in our platform” and reduced the number of market makers active on the exchange from more than 20 to “less than five.” Banks have also been reluctant to provide a fiat on/off ramp to Binance.US, lest they receive “unpleasant subpoenas from the SEC.”
Blodgett said Binance.US had laid off more than 200 jobs, about two-thirds of its workforce, affecting “many honest, hard-working Americans.” Blodgett apparently denied Binance responsibility for these job losses and instead decided to place all the blame on the SEC for leading them to believe that Binance was under regulatory oversight.
Never mind that Binance acknowledged widespread criminal activity included in the $4.3 billion settlement it reached with the U.S. Department of Justice (DoJ) last November. Never mind that CZ is currently waiting to find out how much time he will have to spend in an American prison for his heinous illegal actions. Never mind that Binance continues to ignore local laws in countries around the world. No, it’s definitely the SEC’s fault.
Philippine relief?
One jurisdiction where Binance appears to have received at least a temporary license is the Philippines, where the exchange has never received (never applied for) registration with the Philippine Securities and Exchange Commission (PSEC).
Last November, PSEC began restricting access to Binance following years of urging.
From Infrawatch PH, a local think tank. The process of restricting access was expected to take three months, meaning the country’s telecom regulator would begin blocking local access to the Binance website around February 29.
However, PSEC later stated that this date may be delayed based on ‘feedback’ from unspecified sources. As the deadline approached, a PSEC spokesperson told local media outlet BitPinas that the regulator was “assessing all possible consequences of the block, including the impact on Philippine customer funds.”
On March 7, PSEC Chairman Emilio Aquino said: aspirant The ban was delayed due to turnover in PSEC management. Commissioner Hubert Dominic B. Guevara recently assumed the role of Head of Markets and Securities Regulation, replacing the retiring Kelvin Lester Lee. Aquino added that there were “ongoing discussions” regarding Binance at PSEC. aspirant He said the situation “will be resolved.”
However, this executive change did not stop the National Telecommunications Commission (NTC) from ordering local internet service providers to block investment platform MiTrade’s website and app. MiTrade, like Binance, does not have a license to operate in the Philippines. .
The order also included Aquino thanking the NTC for “supporting our campaign to combat investment fraud and other predatory financial schemes.” Aquino added that PSEC and NTC “will continue to work closely to take similar action against other platforms that facilitate illicit investment activities and other predatory financial schemes.”
FDAdetergent
Much research has been done on the role of the Tether (USDT) stablecoin in past and present token value bubbles. In particular, USDT’s market capitalization recently exceeded $100 billion for the first time. Tether’s money printer tends to turn on whenever a token rally signals, helping to fuel wash trading of BTC and other tokens on exchanges like Tether’s sister company Bitfinex.
After the closure of Binance’s BUSD stablecoin, there was much less interest in FDUSD, a stablecoin launched last July. FDUSD is traded almost exclusively on Binance and has always shown questionable characteristics, but trading volume on the exchange is now entering bad fanfiction territory.
Although FDUSD’s market capitalization is just over $3.2 billion, FDUSD’s 24-hour trading volume on March 11 exceeded $21.5 billion. This means that every FDUSD in existence changes hands almost seven times a day. Compare this to USDT, where trading volume on March 11 was only about 80% of market capitalization.
Bottom line: FDUSD is carrying more than double the daily volume of any vaunted BTC spot-based exchange traded fund. combined. And it’s the best day for the BTC ETF.
Some blockchain observers have repeatedly We have flagged this large volume. I seriously doubt it. Others say that FDUSD Approximately 850 unique addresses, of which only 6 addresses hold all but 2.5% of the issued FDUSD. There’s a new laundry detergent in town, and it’s really foamy, so take your dirty laundry with you!
Expect this nonsense to stop once US federal authorities finally appoint an independent compliance monitor, which Binance agreed to install over the next three to five years as part of the November settlement. Controversial law firm Sullivan & Cromwell reportedly has the inside track for this position, but the federal government needs to get its tail feathers wagging and get a proper fox inside this filthy henhouse ASAP.
For the rest of you, remember to look up every now and then to make sure you don’t fall apart when BTC and other tokens plummet to Earth.
Imagine the smell
We would be remiss if we didn’t at least mention Binance’s incorrect celebration of International Women’s Day. ‘Binance Water’ Perfume was called – wait a minute – cryptocurrency. This product is clearly Encourage more women Tried to jump into the male toxic soup of ‘cryptocurrency’, but women’s reactions ranged from confusion to Annoyance at being sponsored.
Binance CMO Rachel Conlan told TechCrunch that the “tongue-in-cheek” perfume is the product of an “all-female team,” but it failed to impress many female social media users who saw the promotion. It’s the same. This is one of those situations where the goal is to ‘start a conversation’ but the result is a collective STFU.
followCoinGeek’s Crypto Crime CartelThis is a series that explores the flow of a group.bitmextoBinance,Bitcoin.com,Blockstream,shape movement,coinbase,ripple, Ethereum,
FTXandrope— co-opted the digital asset revolution and turned the industry into a minefield for naive (and even experienced) players in the market.
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