Lawyers for Binance CEO in scary regulatory climate for US crypto

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The legal pressure on Binance, the world’s largest crypto exchange, has underscored the potentially chilling effect of a US crackdown on crypto, legal experts told Decrypt.

The company is under scrutiny from multiple agencies, including a complaint filed by the Commodity Futures Trading Commission (CFTC) against Binance and its founder Changpeng CZ Zhao last month.

According to a New York Times report, Zhao has hired white-collar defense attorneys from the law firm Latham & Watkins to represent him personally amid the brewing legal storm.

Court documents filed on Monday show that attorneys from major companies were brought in to represent both the company and Zhao himself in the case.

Meanwhile, the Justice Department is investigating Binances’ conduct as part of an investigation by its anti-money laundering team, Reuters reported. At the same time, the Securities and Exchange Commission (SEC) is reviewing the company’s business practices, The New York Times reported.

This week, the US branch of Binances canceled its acquisition of the bankrupt assets of Voyager Digitals, a deal that had been opposed by several regulators, including the SEC, despite being approved by a judge. Commentators including Ava Labs founder John Wu put an end to regulatory uncertainty in the United States

The United States in terms of creating certainty just lags behind everyone else, Wu said during an appearance on CNBC. The United States will continue to lose businesses, development.

Decrypt has reached out to Binance PR representatives for comment.

A complex landscape

Binances’ problems come at a tense time for relations between the industry and regulators in the United States, highlighted by Coinbases’ lawsuit against the SEC this week in an attempt to force the agency to respond to requests for clearer rules.

But William Kraus, a partner at Fisher Broyles LLP, cautioned against viewing Binances’ struggles as a direct response to the current climate.

While it may seem like Binance is being targeted due to recent political pressure to regulate digital assets, it’s important to remember that most investigations are conducted confidentially for years before the public knows about them. , he told Decrypt. As seen in the CFTC complaint, investigations often revolve around alleged past behavior or relate to issues that have since been resolved by the company.

However, he added that the CFTC case and reported investigations signal to crypto businesses looking to operate in the United States that they will have to navigate a complex and ever-changing legal and regulatory landscape.

Sam Tyfield, a mergers and acquisitions lawyer at UK firm Shoosmiths, told Decrypt that recent events indicate that the tough approach by US authorities could have a chilling effect on the market.

The US approach seems to someone who is not actively involved in the cases at hand to err on the side of treating crypto assets as securities, for lack of an alternative classification, which would place them in a traditional regulatory framework. and well established, he said. . This would have an immediate and crippling effect on the US market.

He added that the developments are not only important for the United States, but also for the rest of the world, noting that while regulators in the EU and Asia may seem more flexible currently, they are only one. broker or trading platform that knocks their constituents away from imposing a regime as harsh as the United States

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