WASHINGTON, D.C.—Amanda Fischer, Policy Director and COO of Better Markets, issued the following statement in response to the Securities and Exchange Commission’s (SEC) decision to formally drop its lawsuit against Binance, the world’s largest crypto exchange, and its founder Changpeng Zhao (CZ):
“This decision marks a new low in the SEC’s already disgraceful recent history of surrendering in crypto cases, regardless of the merits and even when the agency is winning in court. By dropping the case against Binance and its founder CZ, the SEC has signaled to lawbreakers that it’s open season to rip-off America’s investors and disrupt and defraud the fair and orderly markets that had made the U.S. the best capital markets in the world.
“The SEC sued Binance two years ago, accusing it and its chief executive CZ of thirteen separate, grievous violations of securities law, including operating an illegal exchange, broker, and clearing agency in the U.S. and also of aiding and abetting certain VIP U.S. clients with evading restrictions on American customers accessing Binance’s foreign exchange. The SEC also alleged that Binance perpetuated an illegal wash trading scheme by using an affiliated ‘market making’ trading firm, Sigma Chain, to create fake trading volume on the Binance.US platform. Taken together, these violations are indicative of a coordinated scheme to violate nearly every pillar of American securities law, which had previously established the U.S. as a fair and transparent place to do build a legitimate business.
“By dropping all charges notwithstanding prevailing in the early stages of the litigation, the SEC is dangerously sullying its own reputation. In an almost comical admission, Binance’s own Chief Compliance Officer confessed in private chats that the firm was ‘operating as a fking unlicensed securities exchange in the USA bro.’ And while the Department of Justice’s previous case against Binance and CZ resulted in a minimalist charge not nearly commensurate with the harm caused, it is even more shocking that the SEC has surrendered even though the Binance founder has already admitted to myriad violations and spent time in jail for those crimes.
“Yesterday’s dismissal by the SEC is culmination of a string of actions that have transformed the SEC from crypto’s watchdog to crypto’s lapdog. By dropping the case against Binance and other crypto mega-firms, dismantling the crypto unit within the Division of Enforcement, issuing a string of staff guidance exempting various activities from the securities laws, and rescinding accounting guidance meant to protect crypto customers in bankruptcy, the agency has betrayed its mission and America’s investors, calling into question the rule of law that has made American capital markets the envy of the world.”
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Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.org.
