The former head of internet enforcement at the US Securities and Exchange Commission (SEC) recently issued a warning about crypto exchange Binance.
He said that the recently unsealed filing about the crypto exchange by the Department of Justice (DOJ) should signal its end.
Furthermore, he also noted that the SEC had intensified its legal action against Binance and it would only be a matter of time before the plea deal would collapse, leading to additional charges.
The predictions
John Reed Stark took to X on Saturday to share a lengthy post about crypto exchange Binance in which he made some predictions.
Stark currently serves as the president of John Reed Stark Consulting, a cybersecurity firm, and founded the SEC Office of Internet Enforcement, and served as its chief for 11 years.
In addition, for 15 years, he also served as an SEC enforcement attorney. He highlighted two key developments in the settlement between the US DOJ and Binance.
First off, he pointed out that the Department of Justice (DOJ) had released a number of filings, which shows their rigorous and extensive oversight over the crypto exchange.
He opined that these could signal the end of Binance because of the new compliance commitments as they would cost tens of millions of dollars to implement.
The explanation
The former SEC official said that the oversight and monitorship that would be applicable was not very different from installing bodycams on the bodies of a criminal drug cartel.
He said that the cartel would have to incur the cost of a large, well-credentialed, and experienced team of current and former government agents to monitor the footage around the clock.
Stark continued to assert that similar to a drug cartel, an opaque and secretive financial firm, such as Binance, could not transform itself into a transparent, open, law-abiding, and traditional firm suddenly.
He stated that it was already difficult for a company like that to survive an SEC audit, but it would be impossible for it to go through a FinCEN/DOJ audit.
The expectations
Therefore, he went on to say that it would not take long for the plea deal to fall apart and it would lead to additional charges for the exchange, CZ, and others intertwined with the crypto exchange.
He stressed that no crypto company, or even any other financial company, had ever made a plea agreement with FinCEN/DOJ that involves the extent of forceful, vigorous, and all-inclusive oversight that Binance has agreed to.
Stark also pointed out that a ‘supplemental pleading’ had been filed by the SEC against Binance and it exponentially strengthened its lawsuit against the crypto firm.
He emphasized that in their enforcement action against Binance, the SEC was now adding details revealed by the DOJ in its filings and this would strengthen their case against Binance and CZ.
They have taken details from the plea agreement that Binance and Changpeng Zhao, the founder of Binance, made with the DOJ and these would work against the crypto exchange.