SEC’s Binance lawsuit includes expected and new accusations.

The United States Securities and Exchange Commission (SEC) recently filed a lawsuit against Binance, Binance.US, and Binance CEO Changpeng Zhao (CZ). While the announcement may have come as a surprise to some in the crypto community, the SEC’s focus on the exchange was already well known. Reactions to the contents of the lawsuit have been varied.

CZ claimed in a tweet on June 5th that the media had received the information before Binance, and the company had not yet seen the SEC complaint. Evidence of scrambling behind the scenes may be seen in the two statements Binance issued in response to the suit.

The exchange referred to the suit as “disappointing” in a blog post and emphasized the SEC’s failure to provide clarity and guidance, as well as the impact on financial innovation. In a later statement distributed by email, Binance addressed legal issues more closely, claiming a lack of due process and promising a vigorous defense.

Cory Klippsten, CEO of financial firm Swan Bitcoin, stated that no one who was paying attention should have been taken by surprise by the SEC’s complaint. He claimed in a statement to Cointelegraph:

• Analysis of prices for 6/5 SPX, DXY, BTC, ETH, BNB, XRP, ADA, DOGE, SOL, MATIC.
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“These practices of Binance have essentially been open secrets, so no one who operates in the space will be surprised by any of the charges.”

While some of the details are not unexpected, such as the SEC’s claim that nearly all cryptocurrencies are securities, other revelations may raise eyebrows. The most notable being a message from an unnamed Binance chief compliance officer in 2018, who stated in a message to another company officer:

“We are operating as a fking unlicensed securities exchange in the USA bro.”

Additionally, the suit shed more light on Brian Brooks’ brief tenure as CEO of Binance.US. According to the SEC, Brooks said in testimony:

“[W]hat became clear to me at a certain point was CZ was the CEO of BAM Trading, not me. […] I realized, huh, I’m not actually the one running this company, and the mission that I believe I signed up for isn’t the mission. And as soon as I realized that, I left.”

The Binance suit may also serve as a warning to tokens such as Solana, Cardano, and Polygon, which were singled out by the SEC as potential illegal securities offerings.

There were already indications of a shakeup at the exchange. Bloomberg reported that Richard Teng may be favored to replace CZ as the exchange’s next CEO, citing “persons with direct knowledge.” Teng was appointed to head all regional markets outside the U.S. on May 29th and quickly rose through the ranks after joining Binance Singapore in August 2021 from the Financial Services Regulatory Authority at Abu Dhabi Global Market, where he was CEO.

Related: Binance readies checkbook for potential fines from US regulators: Report

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