Former Binance.US CEO Hires Lawyer For US Investigations
Former Binance.US chief executive Catherine Coley has enlisted the help of James McDonald, a former federal prosecutor and a top cop at the Commodity Futures Trading Commission (CFTC), to represent her in the US government’s investigations into the cryptocurrency exchange. This move comes as Binance faces mounting pressure from the US authorities.
Reuters: A former chief executive of Binance’s de-facto U.S. subsidiary has enlisted a former federal prosecutor and top cop at the CFTC to represent her in the U.S. government’s investigations into the Binance. https://t.co/YMaGprqs0Y
— Wu Blockchain (@WuBlockchain) March 31, 2023
Catherine Coley’s “willful evasion” Charge
The CFTC charged Binance and its CEO and founder Changpeng Zhao with “willful evasion” of US laws for operating an “illegal” exchange and a “sham” compliance programme on Monday. While Coley was not named in the complaint, the Justice Department has also been investigating Binance over money laundering and sanctions violations and has sought records and communications involving Coley from Binance and Binance.US.
It remains unclear what Coley’s status is in the government investigations or whether she has cooperated. Neither McDonald nor Coley has commented on the matter, and the CFTC, the DOJ, and the Securities and Exchange Commission have declined to comment. Binance and Binance.US also did not comment on Coley’s representation when contacted by Reuters.
Retaining US customer Liquidity
Coley, a former Morgan Stanley trader, launched Binance.US in 2019 and left the company suddenly two years later. According to sources, she had clashed with Zhao over his control of the American exchange, which was set up to serve US customers in compliance with US laws. Zhao in reality managed the American firm as a de-facto subsidiary, and his finance team had access to its bank account. The finance team transferred hundreds of millions of dollars out of the account to a trading firm managed by Zhao, leading Coley to express concern to Binance staff about the outflows.
The CFTC’s complaint alleged that Binance personnel, including Zhao, had “dictated Binance.US’s corporate strategy, launch, and early operations”. The CFTC also said that when Zhao hired the first CEO of Binance.US’s operating company, BAM Trading, he described the global Binance.com exchange as a “pirate ship” and explained “he wished for Binance.US to be a navy boat.” Even after Binance.US launched, Zhao continued to conceal the global exchange’s US user base and was focused on retaining the liquidity and revenue American customers supplied, the complaint stated.
Mounting Legal Pressure
McDonald’s representation of Coley comes as the US investigations continue to mount pressure on Binance, which is currently the world’s largest digital currency exchange. In a blog post, Zhao called the CFTC’s charges “unexpected and disappointing,” adding “we do not agree with the characterization of many of the issues alleged in the complaint.”
It remains to be seen what the outcomes of the investigations will be, and whether or not they will have a significant impact on Binance and its operations. However, with the mounting legal pressure and the involvement of high-profile lawyers like McDonald, it is clear that the situation is far from over.
