Read the court filing. There's a lot of inside information from "BAM CEO A" and "BAM CEO B". These were the first two CEOs of Binance.us. They came on board thinking they had a real job. Then they discovered they were just figureheads.
"BAM CEO A" was fired. "BAM CEO B" quit after three months and started cooperating with US regulators.
"Upon assuming his CEO duties, however, BAM CEO B quickly learned that
Binance, in fact, exerted and would not relinquish substantial control over BAM Trading and the
operation of the Binance.US Platform. As he testified under oath, BAM CEO B did not “have
any firsthand knowledge of exactly what [Binance] entity managed [Binance.US Platform’s]
servers,” but he knew it “wasn’t [BAM Trading].” Similarly, he also testified that the matching
engine was “presumably owned and administered by some [Binance] entity, but I have no idea
which one, and then there’s other servers doing other functions.” He concluded, the “biggest risk
in this company is we are highly dependent on a bunch of technology that sits in Asia.”
"BAM CEO B tried to implement plans to migrate those functions and control of
the crypto assets from Binance to BAM Trading and into the United States, but Zhao quickly
overruled him, causing BAM CEO B to resign approximately three months into his tenure."
"As BAM CEO B testified, “[W]hat became clear to me at a certain point was CZ
was the CEO of BAM Trading, not me.” He further explained that he spent his first 80 days as
CEO trying “to get these core foundational things realigned,” but “was overruled on all of them”
by Zhao. BAM CEO B elaborated, “All of the things that we had previously agreed and had
worked on for 80 days were suddenly repudiated with no further discussion, and on that day, 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.”"
Former Comptroller of the Currency (and former Chief Legal Officer at Coinbase) Brian Brooks served as CEO of Binance.US for only 3 months in 2021. He makes a very credible witness!
> In one instance, the Binance chief compliance officer messaged a colleague that, “[w]e are operating as a fking unlicensed securities exchange in the USA bro.”
My theory is that Binance execs were having these chats in an encrypted medium (e.g. WA or Signal) but didn't secure themselves against a defector.
I think someone on the inside took screenshots and went to the feds (or started cooperating under legal pressure). There's even a leading candidate [0].
What's funny about this is it's a fine metaphor for what ails crypto as a whole. The technology is cryptographically secure, but not at all robust to much simpler betrayals, hacks, etc. If you trust overmuch in the tech and don't focus on less technically interesting but more fundamental threats, you're apt to get rekt.
what's stupid is that quotes like this, not actual substance of what their business practices are, are the only way the SEC can establish what is and isn't a "security." there is no real truth or objective test and the SEC has offered no meaningful guidance. so they just determine this based on subjective emails the CEO sent once.
"The S.E.C. said the world’s largest cryptocurrency exchange mixed “billions of dollars” in customer funds and secretly sent them to a separate company controlled by Binance’s founder, Changpeng Zhao."
That's a criminal offense.
Here's the court filing.[1] This is just a civil case for now, but expect
criminal charges. "Between October 2022 and January 2023, Zhao personally received $62.5 million from one of the Binance bank accounts."
The court filing shows the structure of Zhao's companies. The SEC has figured out how Binance works.
One thing I noticed, which always felt possibly-illegal, was how Binance and other exchanges would frequently freeze up funds that didn't meet minimum withdraws. If a coin fell to too-low of a price, they'd essentially just keep them. Sure, it is only $5-100 here and there, but that all adds up. Where does it go?
With a real bank or exchange, I'd expect some ability to sweep up my accounts and get a paper check for 50 cents if needed.
If I remember correctly you could always exchange those low amounts for their shitcoin, then exchange that for something with reasonable withdrawl fees like monero and withdraw that. (or even withdraw their shitcoin and exchange it elsewhere if it was below their minimum exchange amount)
Does anyone have withdrawal minimum that are close to $100? Most of the Kraken minimums are below $1.
It's also not true that can always empty a bank account for free. HSBC wouldn't let me sweep funds out of an account with ~$4.00 in it, for example, since it was international and the transfer fee was larger than that.
Any centralized crypto exchange will ultimately end up being a scam because there is no reason for centralized exchanges to exist at all. There is no reason for anyone to hold your funds for more than what it necessary to complete a transaction. Because of this, there is really no money to be made.
I remember the last post from Fred Wilson: "The Freedom To Innovate" [1]. Even if the SEC is right about Binance and others, and there are without doubt blatant and huge frauds in Web3, there are huge problems with the financial modernization within the US (and the world). Domestic wire transfers in US takes longer and are more expensive than in Europe and developing countries such as Brazil and Argentina. The SEC is not showing a neutral point of view and any special concerns with innovation and legacy system frauds.
It doesn't matter if it is call Web3, blockchain, or whatever buzzword you like, banks have real power and a clash is inevitable now or in the near future. It took a century to dethrone Bell System [2]. It is a political and economical issue, not just an industry.
Are we days or hours away from finding out Binance is insolvent?
Anyway, it was obvious to everyone that Binance was a scam from the beginning. Anyone with a brain knows to use a quality exchange like <INSERT NEXT FAILED CRYPTO EXCHANGE HERE>.
Isn't CZ already being sued by the CFTC? Is cryptocurrency a security or a commodity and under whose jurisdiction does Binance fall? Or were they trading in both types of instruments?
The SEC complaint sidesteps what Bitcoin or Ethereum are by focussing on other transactions, e.g. the ICO and trading of BNB and the private placements of its own stock.
My understanding may be off, but I believe that Bitcoin will be able to avoid it but Ethereum may have a harder time due to the fact that contracts are pretty much baked into ETH at a basic protocol level. I'm sure if I'm wrong someone will correct me.
Gensler is a Bitcoin maxi. He tried to walk back the previous head’s statements on ethereum but unfortunately for him it cannot be done easily. However he will do his best to ban all other crypto.
I believe there is some indication that the SEC allowed only those two to fall into commodities instead of securities. And that decision may be hard to undo.
I really want crypto to fade away out of existence and into irrelevance, FedNow is coming soon and we don't need crypto or shady crypto exchanges like Binance.
[+] [-] Animats|2 years ago|reply
"Upon assuming his CEO duties, however, BAM CEO B quickly learned that Binance, in fact, exerted and would not relinquish substantial control over BAM Trading and the operation of the Binance.US Platform. As he testified under oath, BAM CEO B did not “have any firsthand knowledge of exactly what [Binance] entity managed [Binance.US Platform’s] servers,” but he knew it “wasn’t [BAM Trading].” Similarly, he also testified that the matching engine was “presumably owned and administered by some [Binance] entity, but I have no idea which one, and then there’s other servers doing other functions.” He concluded, the “biggest risk in this company is we are highly dependent on a bunch of technology that sits in Asia.”
"BAM CEO B tried to implement plans to migrate those functions and control of the crypto assets from Binance to BAM Trading and into the United States, but Zhao quickly overruled him, causing BAM CEO B to resign approximately three months into his tenure."
"As BAM CEO B testified, “[W]hat became clear to me at a certain point was CZ was the CEO of BAM Trading, not me.” He further explained that he spent his first 80 days as CEO trying “to get these core foundational things realigned,” but “was overruled on all of them” by Zhao. BAM CEO B elaborated, “All of the things that we had previously agreed and had worked on for 80 days were suddenly repudiated with no further discussion, and on that day, 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.”"
[+] [-] legutierr|2 years ago|reply
https://en.m.wikipedia.org/wiki/Brian_P._Brooks#Binance.US
[+] [-] csunbird|2 years ago|reply
Their job was to PLEASE: Provide legal exculpation and sign everything. (hey HIMYM fans!)
[+] [-] gadnuk|2 years ago|reply
Source: https://twitter.com/JohnReedStark/status/1665748594421297152
This is a legendary quote from the filing.
[+] [-] setgree|2 years ago|reply
I think someone on the inside took screenshots and went to the feds (or started cooperating under legal pressure). There's even a leading candidate [0].
What's funny about this is it's a fine metaphor for what ails crypto as a whole. The technology is cryptographically secure, but not at all robust to much simpler betrayals, hacks, etc. If you trust overmuch in the tech and don't focus on less technically interesting but more fundamental threats, you're apt to get rekt.
[0]https://decrypt.co/124999/ex-binance-us-ceo-catherine-coley-...
[+] [-] civilitty|2 years ago|reply
https://www.youtube.com/watch?v=Ly82nabRRYc&t=80
Robert Rules would be proud
[+] [-] pcbro141|2 years ago|reply
SEC just tweeted the quote
[+] [-] jeroenhd|2 years ago|reply
By why would you ever send that out over a medium that'll leave a paper trail?
Thank goodness that criminals aren't very smart. Their idiocy is doing society a huge favor.
[+] [-] johndhi|2 years ago|reply
[+] [-] ryan69howard|2 years ago|reply
[+] [-] optimalsolver|2 years ago|reply
https://www.youtube.com/watch?v=14WE3A0PwVs
[+] [-] mhh__|2 years ago|reply
[+] [-] Animats|2 years ago|reply
That's a criminal offense.
Here's the court filing.[1] This is just a civil case for now, but expect criminal charges. "Between October 2022 and January 2023, Zhao personally received $62.5 million from one of the Binance bank accounts."
The court filing shows the structure of Zhao's companies. The SEC has figured out how Binance works.
[1] https://www.sec.gov/files/litigation/complaints/2023/comp-pr...
[+] [-] janmo|2 years ago|reply
[+] [-] samsolomon|2 years ago|reply
[+] [-] tibbon|2 years ago|reply
With a real bank or exchange, I'd expect some ability to sweep up my accounts and get a paper check for 50 cents if needed.
[+] [-] StingyJelly|2 years ago|reply
[+] [-] sebzim4500|2 years ago|reply
Does anyone have withdrawal minimum that are close to $100? Most of the Kraken minimums are below $1.
It's also not true that can always empty a bank account for free. HSBC wouldn't let me sweep funds out of an account with ~$4.00 in it, for example, since it was international and the transfer fee was larger than that.
[+] [-] moralestapia|2 years ago|reply
Btw, is there a single bitcoin exchange who is operated by people that do not behave like teenagers?
[+] [-] themagician|2 years ago|reply
Any centralized crypto exchange will ultimately end up being a scam because there is no reason for centralized exchanges to exist at all. There is no reason for anyone to hold your funds for more than what it necessary to complete a transaction. Because of this, there is really no money to be made.
[+] [-] artursapek|2 years ago|reply
[+] [-] thebiglebrewski|2 years ago|reply
[+] [-] el_nahual|2 years ago|reply
[+] [-] refulgentis|2 years ago|reply
[+] [-] wslh|2 years ago|reply
It doesn't matter if it is call Web3, blockchain, or whatever buzzword you like, banks have real power and a clash is inevitable now or in the near future. It took a century to dethrone Bell System [2]. It is a political and economical issue, not just an industry.
[1] https://news.ycombinator.com/item?id=36199584
[2] https://en.wikipedia.org/wiki/Bell_System
[+] [-] themagician|2 years ago|reply
Anyway, it was obvious to everyone that Binance was a scam from the beginning. Anyone with a brain knows to use a quality exchange like <INSERT NEXT FAILED CRYPTO EXCHANGE HERE>.
[+] [-] EddieEngineers|2 years ago|reply
[+] [-] Geekette|2 years ago|reply
[+] [-] linusg789|2 years ago|reply
Archive: https://ghostarchive.org/archive/TiwuL
[+] [-] mgamache|2 years ago|reply
https://cointelegraph.com/news/nothing-is-a-coincidence-with...
[+] [-] misnome|2 years ago|reply
[+] [-] bmc7505|2 years ago|reply
https://news.ycombinator.com/item?id=35327996
[+] [-] JumpCrisscross|2 years ago|reply
The SEC complaint sidesteps what Bitcoin or Ethereum are by focussing on other transactions, e.g. the ICO and trading of BNB and the private placements of its own stock.
[+] [-] wmf|2 years ago|reply
[+] [-] swamp40|2 years ago|reply
But all the bigwigs are offshore.
[+] [-] EddieEngineers|2 years ago|reply
[+] [-] unknown|2 years ago|reply
[deleted]
[+] [-] legitster|2 years ago|reply
[+] [-] GenerWork|2 years ago|reply
[+] [-] simple-thoughts|2 years ago|reply
[+] [-] HWR_14|2 years ago|reply
[+] [-] tibbydudeza|2 years ago|reply
[+] [-] colesantiago|2 years ago|reply
I really want crypto to fade away out of existence and into irrelevance, FedNow is coming soon and we don't need crypto or shady crypto exchanges like Binance.
Glad to see the US taking action.
[+] [-] zarzavat|2 years ago|reply
[+] [-] infamouscow|2 years ago|reply
[deleted]
[+] [-] alphanullmeric|2 years ago|reply
[+] [-] asciii|2 years ago|reply
Not super shady at all Zhao
[+] [-] madars|2 years ago|reply
[+] [-] hiq|2 years ago|reply