Key Points:
- Binance CEO contradicts reports, asserts lending $250M to BAM Management, not vice versa.
- Ongoing SEC lawsuit accuses Binance of violating federal securities laws.
- Declining Bitcoin trading volume amid mounting global regulatory pressures.
Changpeng Zhao, the CEO of Binance, has contradicted allegations of receiving a $250 million loan from BAM Management, the parent company of Binance.US, stating that the transaction occurred in the opposite direction.
In a tweet made on Wednesday, the cryptocurrency magnate clarified that he had actually extended a $250 million loan to BAM Management some time ago, rather than receiving one himself. CZ went as far as to indicate that he had not yet reclaimed the loan.
The controversy emerged in response to an article by Decrypt, a crypto-focused media outlet, which examined court documents related to an ongoing lawsuit. According to Decrypt’s initial report, Binance.US‘ legal team had mentioned in the documents that BAM Management US Holdings had issued a $250 million convertible note to Zhao in December.
The article has since been updated to rectify the error, confirming that it was Zhao who had loaned $250 million to BAM.
While Zhao admitted to inaccuracies in the report, he did not specify which other details he believed were incorrect.
In a separate legal development, the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Binance and its CEO in June, alleging blatant violations of federal securities laws. The SEC brought forth 13 charges against the platform, including operating an unregistered exchange.
The regulatory agency accused Binance of unlawfully offering unregistered securities to the public, which included its BNB token and BUSD stablecoin.
Binance.US, in response, refuted the SEC’s allegations of misconduct through non-motion documents, contending that there was no evidence of mingling funds, control by Binance CEO Changpeng Zhao, or misappropriation of customer assets.
Throughout the ongoing legal battle, the SEC has repeatedly encountered difficulties in obtaining information from the exchange. Consequently, the SEC filed a motion requesting Binance to make its executives more accessible for depositions and provide comprehensive information. However, during a recent hearing on the matter, the judge expressed hesitation in granting the inspection request at this time.
Meanwhile, Binance has experienced a significant drop in Bitcoin trading volume, largely attributed to increased regulatory scrutiny. The platform’s 7-day average spot trading volume for Bitcoin has plummeted by 57% since the beginning of September, according to reports. Furthermore, Binance’s market share has shrunk by 25% between February and June, with regulatory pressures playing a key role.
In addition to its troubles in the United States, French authorities conducted a visit to Binance’s office in France last month, investigating allegations of illegal provision of digital asset services and aggravated money laundering. Moreover, the country’s Securities and Exchange Commission ordered Binance to cease operations in Nigeria.
Binance has also encountered regulatory challenges in various European countries, including Belgium and Austria, as it readies itself to comply with the European Union’s forthcoming Markets in Crypto Assets (MiCA) regulations.
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