Former Binance.US CEOs Katherine Coley and Brian Brooks testified before the U.S. Securities and Exchange Commission (SEC) before it sued Binance.US partner, the world’s largest crypto exchange Binance.com. RBC Crypto with reference to Bloomberg. Part of the testimony of the ex-heads of the American division was included in the regulator’s lawsuit.
On June 5, the SEC sued Binance, Binance.US, and their founder, Changpeng Zhao. Among other accusations, the regulator claimed that the platforms mixed assets, and the global company remotely controlled Binance.US and influenced its business, although it did not have the right to do so.
In 2019, Katherine Cowley became the first CEO of Binance.US before resigning unexpectedly two years later. She revealed that Binance.US was launched using the resources and staff of the global platform Binance.com, which was operating in China at the time.
According to Cowley, this became one of her “major problems” for her, since most of the information was in Chinese. She noted that the data “had a significant opacity” to her, and added that she did not receive any help from Zhao in migrating it.
In the spring of 2021, she was replaced as CEO of Binance.US by Brian Brooks, formerly head of the Office of the Comptroller of the Currency at the US Treasury. He served as CEO of Binance.US for four months.
Brooks also testified to the SEC. He revealed that Binance.US relied on liquidity provided by investment funds associated with Zhao, with Zhao himself providing the platform with $10 million in seed funding.
The existence of these funds created a “real problem” because it “suggested that the company was, in fact, heavily dependent on Zhao, not only as a controlling entity, but also as an economic counterparty.” According to Brooks, at some point it “became clear to him that Zhao was the CEO of BAM Trading” and not him.
The day after the lawsuit was filed, in which the regulator also accuses Zhao of misusing client funds, the SEC demanded that the assets of the US division of Binance be frozen in order to protect users’ funds. Consideration of this requirement is scheduled for June 13.
Source: Cryptocurrency
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