The United States District Court in Washington, D.C. has summoned Binance CEO Changpeng Zhao (CZ) in response to a lawsuit filed by the Securities and Exchange Commission (SEC) against Binance and CZ for alleged securities law violations.
The court filing states that CZ must respond within 21 days upon being served, and failure to do so may result in a default judgment against him. CZ was served the summons at an address in Malta and commented on the document on Twitter.
“I was told this is just part of the SEC compliant process. Nothing new. Also told I won’t have to appear in person. No need to FUD,” CZ tweeted.
According to a recent report by by The Wall Street Journal, the US SEC and the Justice Department have been probing the relationship of Binance to Binance.US since at least 2020. The report claimed that Binance created Binance.US to distance itself from US regulators and was facing scrutiny and legal challenges.
The latest SEC lawsuit accuses Binance and CZ of various violations, including secretly allowing high-value U.S. customers to trade on the Binance.com platform despite claiming otherwise, and exercising control over customer assets, including diverting them to an entity owned by Zhao.
The SEC also alleges that Binance and BAM Trading operated unregistered national securities exchanges, broker-dealers, and clearing agencies, and that CZ acted as a control person for these operations.
SEC Chair Gary Gensler stated that the SEC’s complaint alleges “an extensive web of deception, conflicts of interest, lack of disclosure, and calculated evasion of the law” by Zhao and Binance entities.
Binance has disputed the allegations and intends to vigorously defend the platform, criticizing the SEC for its refusal to engage with them and provide clarity and guidance to the digital asset industry.
In addition to the lawsuit against Binance, the SEC also filed a lawsuit against Coinbase the day after, and several states have issued show-cause orders to Coinbase for listing unregistered securities and targeting its staking service. Coinbase has argued that the SEC’s actions without clarity are detrimental to America’s economic competitiveness.