Binance And Changpeng Zhao: SEC Wants To Prove FTX-Style Fraud, Says Report

The U.S. Securities and Exchange Commission (SEC) continues its probe into Binance (CRYPTO: BNB) and its founder Changpeng Zhao for possible control over assets on the Binance.US platform.

In June, the SEC accused both entities of running unauthorized securities exchanges, focusing on the risk of misappropriation of American crypto assets in a manner similar to the FTX scandal, The Wall Street Journal reported.

Despite Binance making an agreement with the SEC and Zhao admitting to criminal charges, primarily settling U.S. investigations concerning anti-money laundering and sanctions law compliance, these admissions did not address the misuse of customer crypto assets.

During a recent federal court status hearing, Binance.US's legal team, led by attorney Matthew Laroche, requested U.S. Magistrate Judge Zia Faruqui to terminate the SEC's fraud investigation.

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Judge Faruqui, overseeing the evidentiary disagreements, suggested Zhao's recent guilty pleas reduced the likelihood of him misusing U.S. customer assets.

"At some point, I have to make a leap of faith and say enough is enough," Faruqui expressed to the SEC's attorneys.

Laroche highlighted the detrimental impact of the SEC lawsuit on Binance.US, noting a nearly 90% decrease in the average monthly value of its assets and a significant loss of users.

"The SEC has no evidence that assets have been misused in any way," Laroche stated in court.

The judge urged both parties to resolve their evidentiary issues and provide an update by Dec. 15.

Zhao is currently required to stay in the U.S. as a federal judge deliberates over a motion from the U.S. Department of Justice.

The motion insisted Zhao remain in the U.S. until his sentencing, which is expected early next year.

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