The SEC ‘s inability to locate Changpeng Zhao highlights the challenges of regulating the cryptocurrency industry, which operates largely outside of traditional financial systems and is often decentralized. The outcome of the SEC’s case against Binance and Changpeng Zhao (CZ) remains to be seen, but it is clear that the agency is taking a tough stance on unregistered securities operations in the crypto space.
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The United States Securities and Exchange Commission (SEC) has filed 13 charges against Binance entities and founder Changpeng Zhao (CZ) for operating unregistered exchanges, broker-dealers, and clearing agencies, misrepresenting trading controls and oversight on the Binance.US platform, and the unregistered offer and sale of securities. However, the SEC has been unable to locate Changpeng Zhao (CZ) to serve him with a court summons, prompting the agency to ask the U.S. District Court in Washington, D.C. for “alternative service”.
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The SEC ‘s Request for Alternative Service
The SEC has requested permission from the court to use “alternative means” to serve papers to Binance and Changpeng Zhao (CZ). They are noting that the crypto executive is “famously protective of revealing his whereabouts”. The agency has asked the court to allow it to serve any legal papers by sending copies of the documents to the attorneys who represented Binance and Changpeng Zhao (CZ) during the investigation. The SEC has also requested that the court order Changpeng Zhao (CZ) to deliver a “sworn accounting” immediately.
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The SEC’s request for alternative service was submitted to the District Court on June 7. Additionally, with the agency justifying its stance that typical service – which requires the recipient’s presence and signature – might be challenging in this circumstance. However, the courts typically require some evidence that the defendant cannot be found before alternative service is granted.
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Binance ‘s Response
Binance has not yet responded to the SEC’s request for alternative service. However, the exchange has previously denied the SEC’s allegations. Binance stated that it “takes its compliance obligations seriously and is committed to following all applicable laws and regulations”.
Changpeng Zhao, commonly known as CZ, is a Chinese-born Canadian businessman, investor, and software engineer. Zhao is the co-founder and CEO of Binance, the world's largest cryptocurrency exchange by trading volume as of July 2022. The United States Securities and Exchange Commission (SEC) is a federal agency responsible for enforcing federal securities laws and regulating the securities industry. Binance is a cryptocurrency exchange founded in 2017 by Changpeng Zhao. It is currently the largest cryptocurrency exchange in the world by trading volume. The SEC has accused Binance and Zhao of alleged unregistered securities operations. "Alternative service" is a legal term that refers to the process of serving legal documents to a defendant through a method other than personal service. This can include serving the defendant's lawyers or sending the documents through certified mail. The SEC is requesting alternative service for Zhao because his current residential address is unknown. Zhao's location remains unknown at the time of publication. He is a Chinese-born Canadian citizen who reportedly bought a home in Dubai in 2021. The SEC recently sued Binance and Zhao over alleged unregistered securities operations. The SEC is seeking "alternative service" to issue a legal summons to Zhao. The potential outcome of the SEC's lawsuit against Binance and Zhao is currently unknown. If found guilty, Binance and Zhao could face fines and other penalties. Binance has said that it has been cooperating with the SEC’s investigation but said that the agency “chose to act unilaterally and litigate.” Zhao has not publicly commented on the lawsuit. FAQs
Who is Changpeng Zhao?
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