The United States Securities and Exchange Commission (SEC) is struggling to locate Binance and its CEO, Changpeng Zhao (CZ), to serve legal papers. The regulator filed a legal document with the District Court in the District of Columbia on Thursday, stating that neither Binance nor its executive is known for revealing the premise of a headquarters or domicile, and both are not considered typical foreign entities and individuals. The SEC is now looking for alternative means of issuing legal papers to Zhao and Binance, primarily by sending copies of its documents to the attorneys representing each party.
CZ’s Refusal to Disclose his Whereabouts
The SEC noted that CZ is famously protective of revealing his whereabouts. CZ has often boasted that Binance’s refusal to settle headquarters in any particular jurisdiction is what makes it resilient. Last year, the CEO explained how Binance adopted a remote working model open to global workers after all exchanges were ordered to cease operations in China in September 2017, shortly after the exchange was launched. CZ, who was born in China but is a Canadian citizen, asserts that Binance is not a Chinese company, nor does it own any legal entities in the country.
SEC Lawsuit Against Binance
The SEC filed a 136-page lawsuit against Binance earlier this week, alleging securities violations and market manipulation. The regulator claims that Binance and CZ secretly control their American subsidiary, Binance US, even though the latter is meant to be an independent entity. The regulator filed a restraining order against Binance US, ordering it to freeze all assets and repatriate customers for assets held on the platform within ten days of receiving the order. The agency also ordered that any customer assets being held with other entities controlled by either Binance or CZ be placed back under the direct control of Binance US. The SEC sought to have all crypto be placed in wallets with new private keys within 30 days.
Commingling Customer Funds Allegations
One of the SEC’s chief allegations is that each company commingled customer funds from both platforms across Binance and CZ-owned bank accounts at both Silvergate Bank and Signature Bank. The agency detailed this in a filing on Wednesday, with their accounting citing hundreds of millions of dollars from each platform moving through Zhao-owned firms.
In summary, the SEC is struggling to locate Binance and its CEO, Changpeng Zhao, to serve legal papers, and is seeking alternative means of doing so. The regulator filed a lawsuit against Binance earlier this week, alleging securities violations and market manipulation, and has filed a restraining order against Binance US. The SEC also claims that each company commingled customer funds, with hundreds of millions of dollars from each platform moving through Zhao-owned firms.