Former Securities and Exchange Commission (SEC) official John Reed Stark said on Sunday via Twitter that he believes the U.S. Department of Justice (DOJ) has filed or will file a criminal indictment related to Binance. Stark, who draws from his experience in the SEC Enforcement Division, pointed to various indicators suggesting potential criminal charges in his recent statement.
DOJ Likely to Charge Binance Following SEC and CFTC Actions, Says Former SEC Official
According to John Reed Stark, the former head of internet enforcement at the SEC, the DOJ has either already filed or will file a criminal indictment against Binance, the world’s largest crypto exchange. Stark’s opinion comes after the SEC sued Binance on June 5, 2023, for violating securities laws. The former SEC official emphasized that the Commodity Futures Trading Commission’s lawsuit against Binance, along with the SEC’s latest complaint, “read more like criminal indictments” than typical regulatory actions.
Stark said that the CFTC lawsuit alleges aiding and abetting violations, while the SEC’s complaint alleges that customer funds were commingled and there are accusations of market manipulation. He also highlighted that the SEC seeks extreme remedies, including freezing assets and repatriating funds. “Seeking such emergency relief typically means that the SEC believes they can convince a judge right now, that the defendants have committed fraud and that investor funds are at risk,” the former SEC official wrote in a Twitter post with close to 700 words.
Stark also discussed the evidence presented in the SEC’s accounting declaration and the intermingling of funds and asset transfers it mentioned. “The SEC is obviously working with criminal prosecutors and FBI agents but reveals no other information,” Stark opined. “Neither the CFTC or SEC case intensely focus on money laundering. IMHO, that is the prosecutorial space that has been carved out and reserved for a U.S. DOJ criminal prosecution relating to Binance.” Stark concludes that the DOJ is likely collaborating with officials in this case as well.
“My take is that [the] U.S. DOJ is working with the SEC, CFTC, and multiple informants/whistleblowers, and the next axe to fall is the filing, or unsealing of, Binance-related criminal charges,” Stark’s Twitter post concludes.
This is not the first time Stark has warned about enforcement in the crypto sector. In January, Stark insisted that the “regulatory onslaught” was just the beginning after the SEC charged Gemini and Genesis over their lending platform. When asked why a DOJ indictment might be sealed, the former SEC official replied, “Sealed so the public does not know about because, for whatever reason (e.g. dissipation of assets, destruction of evidence, etc.)”
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