The U.S

The U.S. Securities and Exchange Commission (SEC) issued a letter to Binance and its CEO Changpeng Zhao (CZ), as well as two other subsidiaries BAMTrading Services ("BAMTrading") and BAMManagementUSHoldings Inc ("BAMManagement") filed a lawsuit accusing the defendant of violating US securities trading rules.

The prosecution document is 136 pages long, involving multiple perspectives and some parts that may seem difficult to understand at first glance. In this article, the Daily Planet Daily will provide a deep interpretation of important parts and some easily missed points in the entire text, and attempt to analyze the information behind the text and the SEC's understanding of the security and encryption industry, as well as the true intention of this regulatory action.

Overview key points: (If you have read the regulatory documents before, you can skip reading the first two parts of this article)

• On June 5, local time in the United States, the US SEC sued Yuan An and its CEO Changpeng Zhao, claiming that they "handled customers' funds improperly" and "deceived regulators and investors"
• In addition, SEC claimed that Yuan'an mixed "billions of dollars" of customer funds and secretly transferred them to an independent company called MeritPeakLimited, which was controlled by Changpeng Zhao, the founder of Yuan'an.
• As mentioned in the litigation documents, Cryptocurrency listed as securities includes but is not limited to BNB, BUSD and the following crypto assets: SOL, ADA, MATIC, FIL, ATOM, SAND, MANA, ALGO, AXS and COTI.

Summary of SEC's report on currency security violations by Odaily:

• Coin An disregards federal securities laws and its protection of investors.
• Coin An provides unregistered securities sales.
• Coin An deceives investors and has the characteristics of manipulating Prostitution.
• Coin Security evades US regulation, quoting Coin Security COO as saying, "We never want Coin Security to be regulated
• Yin An and Changpeng Zhao claimed that BAMTrading independently controlled the Binance.US platform, but actually operated behind the scenes.
• Coin An claims that its entity will not serve US customers, but behind it, it helps high net worth US customers bypass geographical restrictions (the March lawsuit was also based on this reason).
• Yuan'an mixed billions of dollars of client funds and secretly transferred them to an independent company called MeritPeakLimited, which was controlled by Changpeng Zhao, the founder of Yuan'an. This is something that regulated US exchanges cannot achieve.
• Coin An intentionally increased the trading volume of Binance. US platform through shuffling trading (also known as virtual trading).
• Coin An did not disclose relevant assets in accordance with the Securities Law.

Take a quick look at the demands of the China Securities Regulatory Commission:

The final judgment sought by the China Securities Regulatory Commission is as follows:

(a) Permanently prohibiting the defendant from continuing to violate the federal securities laws accused of violating;

(b) Order the defendant to repay their illegal gains and attach the estimated interest;

(c) Permanently prohibit the defendant and any entity under their control from directly or indirectly using interstate commercial tools or means:

(i) Participate in any unregistered securities issuance, purchase, quotation, or sale, including any crypto asset securities;

(ii) engage in any securities trading, including any crypto asset securities, in a non registered exchange capacity;

(iii) engage in any securities trading, including any crypto asset securities, as a non registered broker or dealer; as well as

(iv) engage in any securities trading, including any crypto asset securities, as a non registered clearing institution;

(d) Impose a civil fine on the defendant; as well as

(e) Take appropriate or necessary equitable relief measures for the interests of investors as needed.

The CSRC could not understand the Chinese word "playing Taiji", so it claimed that Changpeng Zhao implemented the "Taiji Program in Space" in the face of supervision

In the litigation documents, the CSRC listed several pieces of evidence that Changpeng Zhao and Yuan An evaded the supervision of the United States. Among them, the CSRC mentioned that the establishment of Binance.US was to isolate the risk of monetary security subject being subject to US supervision, and claimed that it was the "Taiji Program in Space" of Changpeng Zhao and the adviser of monetary security. According to the author's speculation, this is likely due to the China Securities Regulatory Commission's inability to understand the meaning of "Tai Chi" in the Chinese context from certain Chinese sources, thus mistakenly understanding the name of this subject's isolation plan as "Tai Chi".

The China Securities Regulatory Commission also mentioned that after the establishment of this "Tai Chi entity", the Coin Security Advisor hopes to "publish a long and detailed Howey test (a test to determine whether assets are securities) asset evaluation framework... to demonstrate the complexity of Howey testing", and then engage in a dialogue with the SEC to discuss "the establishment or acquisition of a broker/dealer or alternative trading system (ATS) is not expected to be successful, but simply to suspend potential enforcement actions

cardIn the litigation documents, the Supervisory Commission even boldly quoted the unofficial words of Coin An CCO, "Brother, we operate an unregistered TM exchange in the United States

At the same time, after the establishment of the US entity Binance.US, the SEC claimed that Changpeng Zhao and Yen An were still guiding high net worth US clients to bypass geographical restrictions and KYC restrictions in various ways, so that they could use more liquid Yen An entities for transactions. The SEC also quoted Changpeng Zhao as saying: "We really need to let users know that they can change their KYC information on Binance.com and continue to use the platform. However, this information needs to be written very carefully, because any content we send will be public. We are not responsible for this." This reason is also the reason why the CFTC sued Coin An in March, Currency security entities should not provide services to US customers.

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For example, by 2021, at least $145 million has been transferred from BAMTrading to SigmaChain's account, and an additional $45 million has been transferred from BAMTrading's TrustCompanyB account to SigmaChain's account. From this account, SigmaChain spent $11 million to purchase a yacht.

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The document states that BAMTrading CEO A explained to Binance's CFO shortly after the article was published that BAMTrading employees "feel like the entire team has become puppets.

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The document also said that Changpeng Zhao decided to replace CEO A of BAMTrading with CEO B of BAMTrading around March 2021, and took office in May 2021. At the time of entry, CEO B of BAMTrading realized that "there is a problem in the relationship between Binance and BAMTrading, and he accepted this role on the condition that he can operate BAMTrading independently outside the control of Changpeng Zhao and Binance." CEO B of BAMTrading issued several public statements, saying that BAMTrading "is not a substitute for Binance".

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According to the analysis of the Daily Planet, A and B are Catherine Coley and Brian Brooks, respectively. Catherine Coley served as the CEO of Binance. US in 2020, and Brian Brooks served as the CEO of Binance. US in mid-2021, and was previously the Inspector General of the National Bank of the United States

Coin An strongly opposes this statement. In its statement regarding the litigation documents, it appears that the SEC's actions here are aimed at hastily obtaining jurisdiction from other regulatory agencies, and investors do not seem to be a priority for the SEC. Due to our size and global visibility, Binance has now become a vulnerable target, caught in a tug of war between US regulatory agencies.

It seems that the SEC's goal here has never been to protect investors; If that were the case, employees should have had a deep exchange of facts and made efforts in showcasing the security of the Binance. US platform. On the contrary, the true intention of the SEC here seems to be to make headlines

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The real claim beyond the document: jurisdictional dispute or Liwei?

Some observers believe that the SEC may sue Yuanan for the purpose of competing with the Commodity Futures Trading Commission (CFTC) for the jurisdiction of crypto assets. It is worth noting that CFTC also filed a lawsuit against Coin An in March this year and filed similar charges. Many of the allegations in the SEC lawsuit are similar to those of the CFTC, which may indicate overlapping areas of concern between the two institutions.

The regulatory responsibility and jurisdiction in the field of encrypted assets have always been a complex issue, and competition and overlap may arise between different institutions. Therefore, some observers believe that the SEC's lawsuit against Coin Security may be aimed at consolidating its position in cryptoasset regulation and competing with the CFTC for jurisdiction in this field.