The SEC’s investigation into potential fraud at Binance US has taken a new turn with the Department of Justice’s charges against the platform and its former CEO, Changpeng Zhao (CZ). CZ’s admission of guilt has had a significant impact on the case. The DOJ is now working to ensure that CZ receives the maximum jail time possible. The SEC’s lawsuit against Binance US, which began in June, is reminiscent of the FTX scandal, with allegations of fraudulent activities that threaten client funds. The SEC is seeking evidence of foul play within Binance, particularly regarding CZ’s alleged control over assets. WSJ reports suggest that customer assets may have been diverted to Sigma Chain in Switzerland under Zhao’s command. Binance.US’s legal team has contested the SEC’s investigation, claiming a lack of evidence. However, the SEC remains hopeful that the DOJ’s investigations and charges will strengthen their case. Binance.US attorney Matthew Laroche has raised concerns about the lawsuit’s costs and its impact on the exchange’s assets and user base. CZ’s exit as CEO has allowed Richard Teng to step into the chief role. Judge Zia Faruqui, overseeing the Binance and SEC case, has expressed skepticism about asset misappropriation but urged a swift resolution. CZ is currently waiting for travel permissions before his February sentencing, facing a potential 18-month prison sentence.
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