{"id":19127,"date":"2023-06-08T15:50:10","date_gmt":"2023-06-08T15:50:10","guid":{"rendered":"https:\/\/nftandcrypto-news.com\/crypto\/binance-may-have-lied-to-us-lawmakers-argue-senators-report\/"},"modified":"2023-06-08T15:50:13","modified_gmt":"2023-06-08T15:50:13","slug":"binance-may-have-lied-to-us-lawmakers-argue-senators-report","status":"publish","type":"post","link":"https:\/\/nftandcrypto-news.com\/crypto\/binance-may-have-lied-to-us-lawmakers-argue-senators-report\/","title":{"rendered":"Binance may have lied to US lawmakers, argue senators: Report"},"content":{"rendered":"

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Binance may have misled lawmakers in the United States about its business dealings and relationship with its local unit in a letter sent in March, Bloomberg\u00a0reported on June 8.\u00a0<\/p>\n

In a letter sent to United States Attorney General Merrick, senators Elizabeth Warren and Chris Van Hollen asked the Justice Department to investigate whether Binance made a false statement to Congress earlier this year. In a lawsuit filed on June 5, the Securities and Exchange Commission (SEC) alleged that Binance’s global entity and\u00a0American unit were commingled.\u00a0<\/p>\n

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Today we charged Binance Holdings Ltd. (Binance); U.S.-based affiliate, BAM Trading Services Inc., which, together with Binance, operates https:\/\/t.co\/swcxioZKVP; and their founder, Changpeng Zhao, with a variety of securities law violations.https:\/\/t.co\/H1wgGgR5ir pic.twitter.com\/IWTb7Et86H<\/a><\/p>\n

\u2014 U.S. Securities and Exchange Commission (@SECGov) June 5, 2023<\/a><\/p><\/blockquote>\n

In March, three U.S. senators led by Elizabeth Warren\u00a0sent a letter to Binance CEO Changpeng \u201cCZ\u201d Zhao and Binance.US CEO Brian Shroder questioning the exchange’s operations and requesting balance sheets. At that time, the senators alleged that Binance and its American arm attempted to evade local regulators, avoid sanctions, and facilitate money laundering.<\/p>\n

Nearly three weeks later, Binance chief strategy officer Patrick Hillman\u00a0sent the requested documents to Congress along with a 14-page letter diving into the exchange\u2019s compliance history, recognizing previous mistakes and claiming the firm has built solid Know Your Customer and Anti-Money Laundering policies in the past years.<\/p>\n

Why does Binance.US independence matter?<\/h3>\n

The independence of Binance.US from its global unity is critical for two reasons: regulatory jurisdiction and liability in the event of a failure, Syracuse University law professor Jack Graves told Cointelegraph.<\/p>\n

“If you don’t keep them independent, then the U.S. regulators will go after Binance International and say we have jurisdiction because you are acting through the U.S. entity. And in fact, I think the SEC is looking at that,” said Graves.<\/p>\n

The second relevant aspect lies in the possibility of Binance.US going bankrupt. Graves noted that there is a basic principle that a corporation, and not its owners, are responsible for its debts. “So, as long as Binance.US is fully independent, and it ends up in bankruptcy, Binance international is not obligated to pay the debts of Binance.US.” <\/p>\n

If the companies were commingling funds, the owners, which is Binance’s global unit, would be responsible in the event of bankruptcy. “That’s why the corporate veil, in effect, provides limited liability for the owners. And a parent corporation, like Binance international, it’s just like any other owner, it’s protected. It’s protected from liability, as long as those companies are truly independent,” Graves continued, explaining that there may be exceptions.<\/p>\n

On June 5, the companies issued separate responses to the SEC lawsuit. Binance’s global unit claimed it had \u201cactively cooperated with the SEC\u2019s investigations and […] Worked hard to answer their questions and address their concerns.” The exchange also said: “While we take the SEC\u2019s allegations seriously, they should not be the subject of an SEC enforcement action, let alone on an emergency basis.\u201d<\/p>\n

Binance.US tweeted that the SEC\u2019s claims are its \u201clatest example of regulation by enforcement.\u201d The suit \u201cis baseless, and we intend to defend ourselves vigorously,\u201d it continued.<\/p>\n

Magazine: Tornado Cash 2.0 \u2014 The race to build safe and legal coin mixers<\/em><\/strong><\/p>\n<\/div>\n